Germany is ready to compromise in the long-running battle over lower value added tax rates in the European Union and is hoping for a deal at a meeting next week, German Finance Minister Peer Steinbrueck said on Tuesday. EU leaders have said previously they would defer until March a decision on whether to prolong reduced rates of sales tax on local services and a reluctant Germany had pledged to be constructive.
"Germany is ready to help bring about a compromise on the question of lower VAT rates as part of our Ecofin discussion next week," Steinbrueck told a news conference in Paris after a meeting with his French counterpart Christine Lagarde. "I hope a breakthrough on this can be achieved at our next meeting," he said, referring to the upcoming meeting of European Union finance ministers in Brussels on March 10.
The European Commission has proposed extending the system, which allows 18 EU states to levy VAT rates below the 15 percent standard level, on services from bicycle and home repairs to haircuts. It is due to expire in 2010. France has long campaigned to be allowed to levy reduced VAT on restaurant meals but has been thwarted by Germany's veto.
Steinbrueck said Germany had long had reservations about the issue but he said a deal could be reached over labour-intensive services and restaurant meals. "It's a very big step for Germany because we are reasonably sure that we will face considerable domestic political pressure to introduce moves that other countries may be considering as options," he said. "But I think we must be prepared to get this difficult package of issues off the agenda.
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