Companies win - people lose

The german government came out with a plan to cut the corporate tax rate from about 38.7 percent to 29 percent, beginning in 2008. The rationale is to maintain and increase german competiviteness in the face of globalization. And it is felt that Germany will be better positioned to compete with other European countries and attract more companies.

This is taking place while the value added tax is increased from 16 to 19 percent next year. Corporate taxes are being decreased, while the consumption tax is rising. Sales taxes affect the poor more than the wealthy and they will be more affected by the upcoming increase. The government has decided to improve the situation for companies who would find it quite easy to leave the country, while hitting up consumers who are less mobile.