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Germany

Fischer Proposes Tax on Luxury Goods

German Foreign Minister Joschka Fischer proposed the introduction of a new value-added tax on luxury goods in an interview with a German Sunday newspaper. "Care must always be taken with taxes, but with goods which are already very expensive, we can consider a third rate of VAT," Fischer told the Bild am Sonntag newspaper. However, in an early general election salvo, Fischer, a member of the junior partner in the government coalition, the Greens, criticized proposals by the opposition conservatives to raise the general rate of VAT in Germany from 16 percent to 18 percent. "An across-the-board rise in VAT reduces people's buying power," Fischer said. Angela Merkel, the Christian Democratic challenger to Chancellor Gerhard Schröder in the election on September 18, has proposed using the increased receipts from VAT to help reduce unemployment which is hovering around the five million mark. But Schröder's Social Democrats and the Greens believe raising the tax would be a counterproductive measure which would penalize the poor more than the rich.

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