BERLIN, May 19 (UPI) -- German lawmakers on Friday agreed to raise the country's value-added tax by three points to 19 percent by 2007, amid claims the move will hurt consumer spending.
The country's business leaders and the opposition were protesting the raise, which Chancellor Angela Merkel's right-left government hopes will lower the federal deficit and, to a lesser degree, bring down non-wage labor costs.
In Friday's decision in the lower house of parliament, 396 of 545 voted in favor of the package of measures including the tax raise, while 146 voted against it. Three votes were invalid.
Other measures of the bill include cutting Christmas benefits of federal employees in half, and lowering federal support for states' public transportation systems.
Free Democrat head Guido Westerwelle strongly criticized the government for what he claims is "election fraud."
Merkel's center-right Christian Democrat Union had campaigned to lower taxes to spark job creation. She had initially said she wanted to raise the VAT by two points only. The center-left Social Democrats, now partners in government, had viciously campaigned against the tax raise.
The bill needs final approval from Germany's upper house of parliament and observers say it will likely go through.
Germany would still stand at the middle of the European tax table: At the lower end stand Luxembourg and Cyprus, with 15 percent, 10 points lower than Sweden and Denmark, both with a VAT of 25 percent.
