For the last year one of the main topics for German consumers has been the planned rise in the VAT (MwSt) level from 16% to 19% from 1st January 2007.

The Government has been accused of damaging the economy, just as it was starting to get going again. In December, a lot of fuss was made to persuade consumers to spend their money fast, before the 19% took hold. Actually, unless you are buying something big, like a car, then it will only make a few cents difference and a lot of basic items such as food and books are not affected any, as they have a lower VAT rate of 7%.

Well January came and now a lot of shops are offering to “pay to VAT” for their customers in January – effectively leaving prices alone but including the 19% instead of 16%. I wonder how long this will last?

I myself have rounded up my hourly rate for IT services, but have rounded down my travel costs to try and keep the figures simple and yet not overcharge my customers.

One of the best pieces of advice I read was in our television magazine, TV14 – if you went to a party on New Year’s Eve you could pay 16% for a meal (starting before midnight), 7% for a taxi afterwards (up to 50km) and 19% the next morning for your hotel room!

The German government has decided to raise the pension age from 65 to 67. Starting from 2012 the pension age will be raised 1 month per year and later by 2 months per year until 2029. This affects everyone born from 1947 onwards.
Some have critised the decision, saying that older workers who find it difficult to get a job will just spend longer unemployed before getting their pension.

On the other hand, a type of bonus scheme is planned so that if you have paid full contributions for 45 years you can still claim a pension when you are 65.
Meanwhile, pension contributions are going to be raised next year from 19,5% to 19,9% – while unemployment contributions will go down from 6,5% to 4,2%. With ever more people reaching the pension age the contributions have been steadily climbing for some time to cover the growing state pension costs.

To complicate matters, there are different rules for different types of pensions. This change affects the the standard old-age pension, but there are also widow’s, disabled and civil servant pensions…

But basically, for anyone born in or after 1964, you can expect to work until you are 67. I’d better start getting used to the idea!

Last week I wrote about the new opening hours in Hessen.  Well, I got one detail wrong.  The shops will be allowed to open on Sundays and Bank Holidays for 6 hours, but only 4 times per year – and even then there are exceptions.  For example, they will not be allowed to open on Sundays during advent.