Germany announces 50 billion euro tax programme

Germany has announced a government stimulus programme for Europe’s largest economy in the form of a two year 50 billion euro package that incorporates a variety of different tax breaks from buying new cars to financing building developments.

The German Chancellor, Angela Merkel, has described the package as a bold statement that has had to be put forward in order to safeguard the economy for the global financial crisis.

The overall intention is to assist the economy through to 2010 and the cabinet was quick to differentiate the programme from being seen as an artificial state intervention, but rather a stimulation programme to boost domestic spending within the economy.

Drastic action was needed as the government has reduced their growth rates for 2009 from 1.2 percent to just 0.2 percent due to the reduction in overall demand to exports.

The programme also focuses upon providing tax relief for households and small to medium sized businesses as a way of driving the economy to build from within, by using incentives for capital investments.

It is believed that the measure could avert negative GDP growth for the country.

Analysts who have studied the programme believe that it is worth the same as 2 percent of the GDP and worth double the American programme that was introduced recently.

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