German chems welcome proposal to retain energy tax breaks

24 August 2010 17:48  [Source: ICIS news]

TORONTO (ICIS)--Germany’s chemical producers welcome a proposal by a high-ranking politician to allow energy-intensive producers like chemicals to retain an important break on eco-energy taxes, a trade group said on Tuesday.

Cutting that break was part of an €80bn ($101bn) savings plan by Chancellor Angela Merkel’s coalition government, a move chemical producers oppose.

However, Michael Fuchs, a leading economics expert in Merkel’s CDU/CSU party, said this week that rather than hurting energy-intensive producers, the government should - in order to achieve its savings target - reverse a planned reduction of sales taxes in the hotel sector.

“Germany must remain an industrial producer. We cannot chase plants that need a lot of energy out of the country with an eco-energy tax,” said Fuchs.

Fuchs said the reduction of sales taxes in the hotel sector had been a “mistake” that unnecessarily complicated an already high-complex value-added sales tax system.

Frankfurt-based chemical producers group VCI said Fuchs' proposal went “in the right direction”.

“Exports are the locomotive of [Germany’s] economy,” said VCI general manager Utz Tillmann. Any move to burden export-dependent producers would slow down the recovery, he said.

Tillmann added that Merkel’s CDU/CSU party was coming to the recognition that higher taxes on producing companies were a wrong move.

“We need better ideas to find savings” than cutting the break on eco-energy taxes, he added.

Der Spiegel, a weekly news magazine, said that the move to reduce sales taxes for hotels had been driven by Merkel’s coalition partner, the Free Democrats. That party usually enjoys strong support from smaller businesses, including hotels and restaurants.

Last week, a number of German businesses leaders, including BASF chief executive Jurgen Hambrecht, opposed a government plan for a special tax on nuclear energy providers.

In related news on Tuesday, Germany’s federal statistics office said in a report that the country’s strong second-quarter economic growth was largely fuelled by an 8.2% sequential increase in exports.

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