June 8, 2020 / 8:11 AM / a month ago

German cabinet speeds up stimulus package

German Chancellor Angela Merkel waits for a televised interview with public broadcaster ARD in Berlin, Germany June 4, 2020. John Macdougall/Pool via REUTERS

BERLIN (Reuters) - German Chancellor Angela Merkel’s ruling coalition is speeding up the implementation of its giant stimulus package with a special cabinet meeting on Friday, a government spokesman said on Monday in light of devastating economic data.

Confirming an earlier Reuters report, government spokesman Steffen Seibert told reporters that the cabinet hoped to pass large parts of the 130 billion-euro (£116 billion) package during an extraordinary meeting on Friday.

Merkel’s ruling coalition sealed the stimulus package after marathon negotiations late last Wednesday to support the recovery of Europe’s largest economy from the coronavirus pandemic.

The cabinet is expected to pave the way for the agreed temporary cut in value-added tax worth some 20 billion euros, cash handouts for parents worth more than 4 billion euros and bigger incentives to buy electric cars worth over 2 billion euros, people familiar with the plans told Reuters earlier.

The coalition is also mulling increasing a climate protection surcharge on the motor vehicle tax for new cars from 2021 so that buyers of gas guzzlers such as large SUVs will pay much more, a draft law showed on Monday.

The new regulation would double the surcharge for buyers of new cars with carbon dioxide emissions of more than 195 grams per kilometre, the finance ministry’s draft showed.

Buyers of smaller cars with carbon dioxide emissions below 95 grams do not face any additional surcharge while electric cars are totally exempt from any motor vehicle tax until the end of 2030, according to the draft law.

The cabinet plans were revealed after economic data showed that industrial output posted a record plunge in April as the coronavirus pandemic forced manufacturers in Europe’s largest economy to halt production.

Reporting by Michael Nienaber and Christian Kraemer; additional reporting by Markus Wacket, editing by Thomas Seythal and Thomas Escritt

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