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Coronavirus

German FinMin: Businesses Have Moral Obligation to Pass on VAT Cut to Customers

BERLIN — Germany’s finance minister says businesses have a “moral obligation” to pass a temporary cut in value-added tax on to customers.

The cut, a centerpiece of a 130 billion-euro ($146 billion) stimulus package aimed at helping pull the economy out of the coronavirus crisis, takes effect for six months starting Wednesday.

The main value-added tax rate was cut to 16% from 19%, and the reduced rate applied to groceries and some other everyday items to 5% from 7%.

Officials are keen to ensure that businesses actually cut prices to encourage buying.

Finance Minister Olaf Scholz told the daily Bild that “if everyone waits to see what others are doing, the economy won’t pick up — and then we could have a long bad economic stretch.”

Scholz, who is also vice chancellor, added that that’s why everyone should play along.

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