BERLIN, June 12 (Reuters) – The German cabinet has agreed to temporarily slash value-added tax to 16% from 19% for all goods from July 1 until Dec. 31 in a bid to boost consumption and help the coronavirus-hit economy, a senior government official said on Friday.

The measure is set to cost around 20 billion euros.

Chancellor Angela Merkel’s cabinet also agreed at a special meeting on Friday that parents will get a cash handout of 300 euros per child.

Both measures are part of a 130 billion euro ($147.20 billion) economic stimulus package that the German government announced last week and which the DIW institute has said could boost economic output in Europe’s largest economy by 1.3 percentage points both this year and next.

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