Coalition considers retracting tax break for hotels

The German government is considering retracting the much-criticised reduction in sales tax for hotel stays, which came into force on January 1. The measure is one of several aimed at shoring up Germany's ailing state finances.

Coalition considers retracting tax break for hotels
Photo: DPA

The retraction would signal that the coalition of the centre-right Christian Democrats (CDU) and business-friendly Free Democrats (FDP) is being forced to retract, or postpone, the programme of tax cuts it promised before last September’s election.

Certain products and services in Germany are subject to a reduced sales tax of 7 percent, rather than the standard 19 percent. Since January 1, one of these has been hotel stays, but the government may be forced to retract this break as state finances come under increasing pressure following several bailout packages. Raising sales tax to 19 percent on some of these services could raise several billion euros in tax revenue.

Other saving measures being mooted include reducing the commuter tax allowance and making housing benefit for the long-term unemployed a flat fee.

According to a report in Saturday’s Bild newspaper, a final decision on Germany’s new tax plan will be made at a conference at the beginning of June.

The CDU economic expert Andreas Lämmel also called on workers around the country to reduced their holidays for the sake of the German economy. “Every extra day of work is good for the economy and for the tax revenue,” he told Bild.

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Germany’s centre-right CDU to elect new leadership by end of the year

German Chancellor Angela Merkel's CDU party will elect its new leadership by the year's end, general secretary Paul Ziemiak said Monday, detailing plans for a clean slate after a disastrous election that the party lost to the Social Democrats.

Chancellor Angela Merkel and CDU leader Armin Laschet on the election campaign trail in Aachen before the election.
Chancellor Angela Merkel and CDU leader Armin Laschet on the election campaign trail in Aachen before the election. Photo: picture alliance/dpa | Federico Gambarini

In power for 16 years under Merkel, the Christian Democratic Union is grappling with its deepest crisis in decades after turning in a historic low score in September’s election.

Its leader Armin Laschet last week signalled his readiness to step aside, setting the ball rolling for renewal at the top.

READ ALSO: Laschet signals he’s ready to step down as CDU leader

Ziemiak said a date for the congress to determine the new makeup of the party’s top brass as well as how rank and file members can participate in the leadership selection process will be announced on November 2nd.

But the party’s leaders “today agreed unanimously that we will elect a completely new executive board,” he said, adding that in terms of the calendar, the “window for this is year’s end”.

Bild daily had reported that the party has made a tentative booking for December 6th-13th in Dresden for its possible congress.

READ ALSO: Germany edges a step closer to a government led by Social Democrats

Laschet, who is state premier of Germany’s most populous region North Rhine-Westphalia, was elected head of the CDU in January.

For some time, he was the clear favourite to succeed Merkel, who is bowing out of politics after running four consecutive coalitions.

But his party’s ratings began to slide as he committed a series of gaffes, including being caught on camera laughing in the background during a solemn tribute to flood victims.

With the CDU’s ratings plunging, Merkel tried to boost Laschet’s campaign with joint appearances, but was unable to help the conservatives pull off a win on election day.