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10 Jul 2008
Peer Steinbrueck, German finance minister, gave a clear indication Germany was unlikely to back a plan proposed by EC earlier this week which will allow EU member states to reduce VAT on certain goods and services.
The EC plan proposes to amend the EU VAT directive to enable member states reduce VAT on labour-intensive services and locally supplied services permanently, such as restaurants and hairdressers, Tax-News.com reports.
However, speaking to the proposal this week, Steinbrueck complained member states had not been adequately consulted and suggested the commission had not thought the idea through thoroughly enough.
He warned that, cutting rates of VAT to as low as 5% on these services, as proposed by EC, would reduce his government's tax revenues by more than €3.5bn, ‘That's not something that you could ever describe as peanuts,’ he said.
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