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Germany:
VAT and pensions
In December, the German government and the Social Democrat opposition agreed to increase the rate of Value Added Tax (VAT) from 15% to 16%, to be effective from 1 April 1998. The legislation has not yet passed all its legislative stages, but as both the governing coalition and the opposition have agreed to the change, there is no reason to suppose any obstacles will be encountered. The increase in VAT will be used to keep the contribution rate to the State pension system at 20.3% for 1998. Without this VAT adjustment the contribution rate would have increased to 21%.
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