BERLIN – Germany’s Cabinet has approved a temporary cut in value-added tax starting next month in a bid to boost consumer demand in Europe’s biggest economy, a centerpiece of the country’s 130 billion-euro ($148 billion) stimulus package.
The finance minister made clear Friday that he doesn't foresee a second stimulus program.The main value-added tax rate will be cut to 16% from 19% for six months starting July 1, and the reduced rate applied to groceries and some other everyday items to 5% from 7%.
Parliament is expected to give the final go-ahead on June 29.The temporary tax cut was a key and unexpected element of the stimulus package thrashed out in early June by the parties in Chancellor Angela Merkel's coalition.
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