Embattled sector slams opposition's VAT proposal
Germany's retailers' association has spoken out against opposition leader Angela Merkel's plan to raise the value-added tax if she is elected, fearing it would slow consumption and cost jobs.

Merkel's Christian Democratic Union party, which has a commanding lead in the polls, has suggested that if it comes to power on September 18 it would raise VAT from 16 per cent to 18 per cent to help pay for a lowering of wage surcharges used to finance the country's unemployment system.

'That is poison for consumption,' said Federation of German Retailers head Hubertus Pellengahr.

With consumers reticent to part with their money and Germany gripped by hard-discount fever, Pellengahr said that higher tax would make consumers even more reluctant to spend.

'It is not a good idea and it must be corrected,' he said.

Chancellor Gerhard Schroeder has spoken out against the plan, saying it would be a 'social injustice' that would hurt people without regular incomes, such as students and the retired.

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