Germany to lower vehicle tax to boost car industry

Berlin - Germany is to boost the ailing car industry by reducing its taxes on low-emission cars, a government spokesman said in Berlin on Wednesday.

Ulrich Wilhelm, spokesman for Chancellor Angela Merkel, said the vehicle-tax changes to be adopted in cabinet on Wednesday next week would be part of a programme to boost the flagging economy.

The disclosure follows days of debate in Berlin about whether to increase government spending, cut taxes or both to ease the effects of an approaching slump.

The car industry in both Europe and the United States has been appealing to governments to act to revive sales.

Wilhelm gave no details but said the package would be a "well-adjusted concept."

Torsten Albig, spokesman for the Finance Ministry, said it was "concretely" planned to alter the sliding scale of vehicle tax, so tax rates were no longer keyed to a vehicle's engine size but instead to the engine's level of emissions.

Environmentalists have pressed for the change, saying it will encourage owners of polluting older cars to scrap them and thus help reduce carbon dioxide emissions blamed for global warming. (dpa)

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