VAT cuts

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Interesting, the tax cut is a baby step towards adding to aggregate demand, but restaurants?

They judge success of their economy by how many people eat out rather than eat at home?

And the UK needs to eliminate all VAT ASAP, and not fool with minor cuts.

The eurozone can’t do it without triggering the insolvency of their national governments.

Germany Will Support French VAT-Cut Initiative on Restaurants

Jan 20 (Bloomberg) — Germany is willing to support a French initiative to reduce value-added tax on some labor- intensive industries including restaurants, Finance Minister Peer Steinbrueck said, opening the door for a Europe-wide agreement.

“There’s a certain willingness to compromise from the German side for certain sectors,” Steinbrueck told a press conference in Brussels today. “I see the strong public demand in France and I don’t see a reason to reject” the idea.

France failed to win European Union approval to reduce VAT at restaurants in December. Successive German governments had blocked the initiative since at least 2002. European leaders will discuss in March whether to overhaul the sales-tax system.

“We have the basis for solid agreement with our German partners,” French Finance Minister Christine Lagarde told reporters after meeting with Steinbrueck in Brussels.

Currently, some EU member states may apply reduced tax rates on certain goods and services. EU leaders will have to decide whether to extend permission to all EU countries to lower VAT for locally-provided labor-intensive services on a permanent basis.

“It will be discussed for the first time in three weeks” and “finalized in March,” Steinbrueck said. “I’m happy that a number of member states are supporting” this effort. Still, “There haven’t been any promises. Everything’s possible,” he said.

The U.K. announced a 12.5 billion-pound ($17.5 billion) cut in its VAT in November to spur consumer spending.

John Lewis Partnership PLC, owner of the U.K.’s largest department-store chain, reported “much stronger” sales in the first four days after the reduction of the sales duty to 15 percent from 17.5 percent. Still, the number of shoppers dropped by 1.7 percent over the first December weekend, compared with the year-earlier period, according to data compiled by Experian Plc.