Senior members of the German government agreed a tax reform plan on Sunday to curb the extent of a tax rise for energy intensive companies from 2011 by hiking tobacco duty, the ministerss of finance and economy said The government officials also agreed on a simplification of the tax system from 2012, which would bring tax relief of 500 million euros ($695.7 million), the ministers said.
The package means large corporate energy consumers will not be hit as hard by the environmental tax, known as the "Oekosteuer," as previously envisaged.
Parliament must debate the plan before it can be adopted. Economy Minister Rainer Bruederle told reporters the measures would only be adopted as a package.
The agreement on the plan follows calls from within Chancellor Angela Merkel's coalition for tax relief measures as robust economic growth eases some of the pressure on Germany's public finances.