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Germany blocks Chirac plan to cut restaurant tax
You're in trouble, Jacques, when even Schroeder won't help out on the eve of elections. OTOH maybe he's got a bigger present for you and this is just a sop. After all, you're such good buddies you can even sit in for one another in Brussels business.Or, maybe the wolves are turning on one another? Germany has rejected a deal in Brussels which would have allowed French President Jacques Chirac to slash value-added tax on restaurant meals, denying him a political boost ahead of this month's French referendum on the European constitution. Gerhard Schröder, theGerman chancellor, promised Mr Chirac at a Franco-German summit in February 2004 that he would back the plan to help French restaurateurs and diners, but the deal came unstuck in backroom negotiations in Brussels on Thursday. Mr Chirac's plan to cut VAT on restaurant meals from 19.6 per cent to 5.5 per cent, at a cost of â¬3bn ($3.8bn, £2bn), was a key part of his 2002 election campaign, and he hoped to gain approval from European Union partners before the May 29 referendum. But the political appeal to French stomachs is now on hold, and is not scheduled to be discussed by finance ministers until June 7; even then there appears little prospect of a breakthrough. French hopes of a "present from Brussels" were dashed at a meeting of tax experts, at which Germany was one of eight countries opposing a package of measures allowing countries to apply reduced rates of value-added tax to certain products and services. Hans Eichel, the German finance minister, is opposed in principle to extending the number of services exempt from the EU's minimum VAT rate of 15 per cent, because Berlin's finances are already stretched. Although Germany said at the meeting it would reluctantly accept making restaurant meals an exception, it would not support any of the other countries' proposals for VAT softening an eclectic package drawn up by the EU's Luxembourg presidency reflecting national preoccupations. They include a Greek plan for lower taxes on motorcycle helmets, a Belgium proposal to help garden service providers, a Lithuanian suggestion that false limbs be exempt, and British attempts to have a zero rate of VAT for repairs to churches. Many finance ministries do not want to open what they regard as a "Pandora's Box", and the entire package including the special regime for restaurants was shot down on Thursday by Germany, Austria, Denmark, Estonia, Poland, Slovakia, Slovenia and Sweden. A German spokesman said: "We would support the French on restaurants, butif you go through the Luxembourg proposal you end up with a 40-strong wish-list." A French spokesman accepted that little progress could now be made until June 7. Posted by: too true 2005-05-14 |
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