Consumers braced for Merkel's tax rises [Germany raises taxes to "boost" the economy.]

telegraph.co.uk ^ | May 20, 2006 | Kate Connolly

[grundle]

German consumers were bracing themselves yesterday for the highest tax increase since the Second World War after parliament voted in favour of a controversial rise in VAT aimed at boosting the country's struggling economy.

Experts were divided yesterday on whether the three-point rise in value added tax to 19 per cent would improve Germany's economic fortunes, or put the brakes on the signs of a recovery.

The increase, which is due to come into effect in January, is the most significant reform to have been passed by the seven-month-old coalition government of Chancellor Angela Merkel.

Her Christian Democratic Union and its partners, the Social Democrats, who together have a 166-seat majority, easily won the Bundestag vote, which will leave consumers and companies carrying an extra tax burden estimated to be around £13 billion.

The changes affect not only consumer goods but also petrol, savings and insurance premiums. A commuters' tax break is to be reduced drastically.

The increases were attacked yesterday by both industry - which said the rises would halt the start of Germany's recovery - and consumer groups, who argued that the increased taxes would drive increasing numbers of Germans into poverty.

[grundle]

I don't see how raisng taxes in an already overtaxed country can "boost" the economy. I think someone over there needs to read up on basic economics.

[stylin19a]

good grief...don't these people look at what's going on in Ireland ?

[saganite]

Merkel appears to be a wolf in sheeps clothing. She definitely isn't governing as she ran.

[Brilliant]

I agree. Although the leftist cabal will tell you that the reason the tax increase will boost the economy is that the tax increase is combined with an equal increase in spending, and the spending increase is more expansive than the tax increase is contractionary.


It's dillusional, of course.

[mewzilla]

Merkel appears to be a wolf in sheeps clothing.

Hey, at least she's clad!

[conservative physics]

lol

socialists STILL believe they can tax themselves into prosperity?

ROFL!

[DrDavid]

Post Reply or Report Abuse, such hard choices to early in the morning.

Come back next March and let us know how the German economy is going then.

[rottndog]

...increased taxes would drive increasing numbers of Germans into poverty.


This is always the case. Taxes go up, the economy slows or even shrinks. Happens every time it is tried.

The real shame is that the German people are going to have to suffer when we already know what the outcome of the higher taxes will be. The lessons of history are there, and once again being ignored.

The flip side to this is that we will have yet another shining example of how raising taxes reduces revenue.

[seppel]

Its to bail out the bankrupt governmental coffers, not to boost the economy. Merkel also said so. I guess the lib. media are spinning this. The economy is going up and the government is taking in more money, which will hopefully be used to get out of debt.

Actually she is only doing what that narcissist Schroeder and his buddy Fischer should have been doing the last 7 years: clean up the government debt cycle.

[KenmcG414]

Didn't they say she was conservative?? They never learn.

[dfwgator]

Ich bin ein Keynesian.

[roaddog727]

Whomever has advised her that RAISING TAXES stimulates economic growth needs to be brought out behind the Kassler-Ripchen Rauch-haus and spanked with a hickory switch.

THAT's just Dumber than dirt.

Some Economist needs some re-education.

[grundle]

Ireland's econonomy is booming because of its tax cuts. I've never heard any liberal praise that.

[seppel]

What you're saying does not tie with what's happening here. The economy is going up and tax revenues are increasing, partly due to increased customs surveillance and increased taxation. The handouts (welfare, subsidies, tax breaks etc.) are also being reduced.

The difference between Merkel and socialists is that she wants to consolidate the state finances, and socialists use money to buy votes with handouts.

Last time I checked, the US was lowering taxes and increasing spending. Now that for sure ain't gonna work.

[DonGrafico]

The increase, which is due to come into effect in January, is the most significant reform to have been passed by the seven-month-old coalition government of Chancellor Angela Merk.

It's a tax increase...no wait, it's an increase...no wait, it's a reform. Yeah, that's right it's a reform. It's a significant reform.

And I thot them Germans was suppozd to be wicked smaht.

[mc6809e]

I don't see how raising taxes in an already overtaxed country can "boost" the economy. I think someone over there needs to read up on basic economics.

Higher taxes CAN boost production and economic output.

Of course the method isn't much better than giving a slave a little more of the lash.

[expatpat]

Last time I checked, the US was lowering taxes and increasing spending. Now that for sure ain't gonna work.

You are totally wrong. When taxes are lowered, tax recipts INCREASE, because business booms and there is more income to be taxed. Kennedy lowered taxes in the 60's -- tax receipts increased. Reagan lowered taxes in the 80's -- tax receipts increased. Bush lowered taxes here in the 21st century and tax receipts increased.

You and your buddies are too dumb to realize that people change their economic actions when tax rates are changed.

[expatpat]

Higher taxes CAN boost production and economic output.

Oh, yeah? Give two examples.

[rottndog]

The economy is going up and tax revenues are increasing...

BINGO! Tax revenue always increases with increased economic growth. More people working + increased business activity = more people paying taxes = more tax revenue.

When the government takes more money out of the economy by higher taxation, economic activity slows, growth stops, and hence revenue drops. This WILL happen again in Germany. Just sit back and watch.

[Fruitbat]

I don't see how raisng taxes in an already overtaxed country can "boost" the economy. I think someone over there needs to read up on basic economics.

You don't?! It's easy, you just take more money out of the economy to boost it. It's simple.

It's kind of like flailing in quicksand.

/sarcasm