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Germany's Economic Wise Men Sceptical On Tax Cuts

by Ulrika Lomas, Tax-News.com, Brussels

14 November 2003


Germany’s five-strong panel of 'economic wise men' has criticized the government’s plans to force through tax cuts next year, arguing they will do very little to boost economic growth.

The panel, which acts as an advisory body to the government on economic issues, in its autumn forecast said the tax cuts are badly timed, and explained that the government must first address the growing budget deficit.

In what Chancellor Gerhard Schroeder called a “very conservative estimate”, the economists are predicting growth of 1.7% next year should the tax cuts go through. Even without the tax cuts, the difference in growth would be minimal at 1.5%, the panel argued.

Whilst the economic panel agrees with the government’s policy of cutting subsidies in certain sectors, they have raised doubts over what they consider is a “lawn-mower” approach to the problem which would slash subsidies across the board. "Subsidies have to get cut selectively," the 'wise men' stated in their report.


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