German Finance Minister Hans Eichel hoped he could slip through new taxes on tobacco and insurance with the excuse that new revenue was needed to pay for anti-terrorist measures, but has come under strong criticism from various quarters, including of course the tobacco companies. Now it seems that the companies' argument that they can't modify vending machines in time for the planned introduction date of the new tax (January 1st 2002) has given the governing coalition an opportunity to back off.
The measure was to have been voted in on Friday, but the country's socialist-green coalition surprisingly vetoed the move at a meeting of the finance subcommittee. The new taxes will now not be levied until April 1st 2002 at the earliest.
As originally announced, it was expected that the new taxes would generate an extra DM3bn for the treasury, although when the enabling bill was published it transpired that income from the increases would amount to DM4.1bn by 2005. That would pay for quite a few extra policemen, and it may be that in the face of economic weakness the Government is having second thoughts about the wisdom of tax increases.
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