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Smokers to pay for industry tax breaks

The Local · 25 Oct 2010, 07:21

Published: 25 Oct 2010 07:21 GMT+02:00

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Government leaders agreed at a meeting in Berlin on Sunday to water down a previously-announced plan to slash the rebate that energy-intensive industries currently enjoy on an environmental tax.

Under a savings package agreed to earlier this year, Angela Merkel’s centre-right coalition government had announced it would quickly phase out the rebate, which costs taxpayers about €1.5 billion a year.

Schäuble announced the change alongside Economy Minister Rainer Brüderle, after the ministers’ meeting in Berlin. News agency DPA reported that industry would be spared €600 million.

The coalition also agreed to simplify the tax system by 2012 and partly backdate the changes to 2011. That simplification could slash taxpayers’ burden by €500 million.

It would also mean tax returns must only be lodged every two years. The new tax plan contains about 60 proposals. Draft laws will be introduced to parliament in December.

Industry had protested fiercely against the scrapping of the environmental tax rebate. The new concession will deliver relief to small and medium-sized businesses.

Schäuble and Brüderle declined to give details as the the exact size of the tobacco tax hike. DPA reported the rise would take place in several – perhaps as many as five – stages.

The hike will be sufficiently steep, however, that it will also help finance the simplification of income tax.

The base rate at which the eco-tax relief is allowed will be raised from the current €500 to €1,000 – rather than the €2,500 previously planned. This would particularly help smaller firms, Schäuble said.

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Firms will be allowed to have their eco-tax burden cut by up to 75 percent. Under the previous plan, they could have it cut by at most 80 percent next year but only by 60 percent in 2012. Previously they have been able to get it reduced by up to 95 percent.

DPA/The Local

The Local (news@thelocal.de)

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Your comments about this article

09:39 October 25, 2010 by majura
I think it's a good move raising the tax on cigarettes, but yet again Germany/EU disappoints on the reasons why. It should be solely to try and reduce the amount of smokers and/or used to put money back into the ailing health care system (that they will all inevitably use), not an industry rebate. Typical CDU/FDP illogical policy/ideology.
10:11 October 25, 2010 by Landmine
Ridiculous... why not tax those that will benefit the most rather than rather than those who choose to excise their rights as adults. Hell why not tax your sold waste output by the kilo -then it would be fair to everyone.
12:10 October 25, 2010 by tallady
Taxes on cigarettes and alcohol are Regressive taxes,,which means they take a larger percentage from low income people compared to high income people.

Low income people that smoke ,generally do not quit over an increase in price.The losers are the family members.That new pair of sport shoes for junior will have to wait,,where for families of high incomes its not going to change their life styles.
16:26 October 25, 2010 by William Thirteen
junior isn't playing any sports - his lungs are too damaged from growing up in a smoking household...
17:00 October 25, 2010 by Bushdiver
Before I pay 1 cent more to this crappy tax hungry government I'll pay the extra cost and buy the cigarettes outside of Germoney. This is by far one of the stupidest ideas this government had had to date. Why should I or any other person have to pay more so that heavy industry can go on collecting tax breaks. I always admire how the German government overlooks the small people and does everything for the people who need it least.
19:14 October 25, 2010 by rfwilson
So, exactly what is the connection between taxing smokers, and giving free tax subsidies to industry? This has to be one of the most irrational ideas in a long time! It's about as sensible as if this subsidy were derived by (let's say) taxing broccoli! Whoever came up with this plan, has s**t for brains!
20:29 October 25, 2010 by SilverBattleAxe
Well someone has to pay for the rebate that's being given to industry. The budget still has to be balanced so let's just increase cigerette tax to pay for the tax break that we just gave to industry.

What will the money collected from the increased cigerette taxes be used for? More tax breaks for big business as is indicated in this article?
19:03 October 26, 2010 by willowsdad
Ok. Now leave us alone and stop passing laws banning us from smoking!
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