Paris - France and Germany agree that lowering the Value Added Tax (VAT) is not an effective response to the economic crisis, French President Nicolas Sarkozy and German Chancellor Angela Merkel said Monday.
Despite signs that a sharp economic contraction was taking hold, the two leaders also reaffirmed that they expected the European Union to hammer out an agreement this month on climate change.
"When we lower the VAT, what does that bring? Only lower prices. We think other measures, such as emphasizing innovation and research, would be more effective for our economies," Sarkozy told journalists after a meeting with German Chancellor Angela Merkel.