Germany rules out tax cuts to boost economy
German Chancellor Angela Merkel told media outlets through a spokesman today that Germany will not cut taxes in order to boost the economy, a strategy that will likely be employed by the US and the UK.
The German government ruled out cutting taxes to boost the economy in coming months, but Chancellor Angela Merkel said on Monday she would hold talks in January to explore the need for further stimulus measures. Government spokesman Thomas Steg said Germany had no plans to cut income tax or value added tax (VAT) before a federal election due next September. "I can rule that out," Steg told a regular news conference. "The Chancellor is firmly convinced that tax cuts can only be considered after the federal election in 2009." Following weekend reports that Britain was planning a cut to VAT to support its economy, Steg said Chancellor Angela Merkel and her Social Democrat Foreign Minister Frank-Walter Steinmeier had discussed and ruled out any such move in Germany.
Unlike in Germany, this afternoon the UK is set to reveal that it will undertake a plan of cutting taxes on the middle class (whole raising them for the upper class) to stimulate the economy.
Gordon Brown promised today to use tax cuts to inject new vigour into the British economy and reduce the length and depth of the recession.
Mr Brown was speaking ahead of this afternoon's Pre-Budget Report in which Chancellor Alistair Darling is expected to announce a 2.5 per cent cut in VAT - to be paid for in part by increasing income tax on the wealthy after the downturn has concluded.
Speaking to the CBI conference in London, Mr Brown rejected the Conservative argument that tax cuts now will simply store up a "tax bombshell" for the future.