Deutsche Post chief backs opposition’s VAT proposal
Germany’s opposition Christian Democratic Union, the favourites to win federal elections expected in September, have won the powerful support of one of the most prominent German businessmen for an increase in value added tax to help offset the country’s high labour costs. Klaus Zumwinkel, chief executive of Deutsche Post, Europe’s biggest postal group, called for an increase in VAT from 16 to 20 per cent in order to finance the country’s creaking social security system, which is funded by levies on employees and employers.
Non-wage labour costs are widely regarded as the biggest obstacle to cutting unemployment from a post-war high of almost 5m. In an interview with the Financial Times, Mr Zumwinkel said that Germany’s cradle-to-grave welfare system, dating from the time of Bismarck in the 19th century, “has to be dramatically changed. . . The only solution is an increase in VAT. It has to go to 20 per cent”.
