VAT increase ‘would cut German state debt’
Friday May 29, 2009
New research has suggested that increasing the rate of VAT offered in Germany could cut state debts.
The study by the German Institute for Economic Research (DIW) has claimed that upping the rate by six per cent from the start of 2011 would help the government to raise funds for its budgeting plans.
According to Deutsche Welle, VAT in the country was last raised in 2005.
Klaus Zimmermann, the president of DIW, told Rheinische Post that the threat of a VAT increase would instantly encourage people to buy goods, as they would want to get hold of them before prices go up.
He added: "There is no other way the government can balance its books."
Hungary recently announced plans to increase its VAT rate by five per cent at the start of July.