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Energy sales tax

The German government has announced its intention to raise value added tax (VAT) on energy consumption from the current 15%. The aim is to compensate for tax cuts in other areas and it hopes to introduce the new rate from 1998. It justifies squeezing more tax from the consumption of electricity, petrol, oil and gas on environmental grounds and for this reason expects to gain the support of opposition parties, including the Greens. The indiscriminate nature of the proposed tax increase, however, regardless of the environmental advantages and disadvantages of each energy form, is bound to draw fire. A VAT increase on energy consumption also needs the blessing of the European Commission.

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