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Cutting sales tax would have little impact on German surplus

Staff Writer | June 12, 2017
Cutting Germany's value-added tax rate from 19 percent would have only a limited impact on reducing trade surpluses that have been sharply criticised by U.S. President Donald Trump, the country's economics ministry said.
German exports
Europe   A ministry spokeswoman:
The comments followed a report in the Welt am Sonntag newspaper which said the German government was examining a possible reduction in the tax, a step recommended by several economists.

A ministry spokeswoman did not deny the report but cautioned that such a move would "have only very limited effect on the current account balance," and it would be more important and sensible to increase investment in Germany.

The government continually reviewed economists' recommendations and examined ways to reduce the surpluses, she added.

Germany faces a national election in September, making immediate changes to taxation policy unlikely.

German officials say the country's current account surplus stems from a variety of factors, including some beyond the government's control, such as the price of oil or the euro exchange rate, as well as high demand for German products.


 

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