German Environment Minister Sigmar Gabriel has drawn fire from business lobbyists for his proposed tax system overhaul aimed at boosting demand for green products.
Gabriel, a member of the center-left Social Democrats, has distributed a 36-page discussion paper suggesting that the sales tax for environmentally-friendly products be slashed to 7 percent from the current 19 percent. The aim is "to give people an incentive to buy environmentally friendly consumer products," the paper says.
Gabriel also wants to change corporate taxation to encourage firms to make investments that protect the environment. Such investments should be tax-deductible by up to 100 percent, the paper says. He also wants to cut tax benefits for air travel and for company cars.
Current tax arrangements for company cars favor luxury cars and sports-utility vehicles, the paper states, adding that it's doubtful "whether off-road capability serves their use as company cars."
The environment ministry sent the list of proposals to industry associations, trade unions, scientists and environmental organizations.
One of Germany's top business lobbies, the German Association of Chambers of Commerce (DIHK), was quick to respond with criticism. "The state is taking too much on if it thinks it has to intervene in every last detail," DIHK chairman Martin Wansleben told Süddeutsche Zeitung newspaper.
Differentiating tax rates for political purposes would distort the economy, Wansleben said. Süddeutsche Zeitung said Gabriel's proposals have also met with skepticism from within Germany's coalition government, where Chancellor Angela Merkel's conservative Christian Democrats are the senior partner.