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Schäuble rules out tax reform before 2013

AFP · 2 Nov 2009, 13:19

Published: 02 Nov 2009 13:19 GMT+01:00

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"At the end of this legislative period (2013) we will have neither a balanced budget nor a fundamentally new income tax system," Wolfgang Schäuble told the Handelsblatt business daily in an interview.

"I consider this to be a realistic prediction. With everything that we have to deal with, this is not the time," he said.

He added: "I am well aware of the charm of the phrase 'simpler, lower, fairer'. But I also know that this is only possible if we proceed very carefully."

Schäuble was named finance minister after Merkel's re-election in September as head of a new coalition pledging to speed Germany's recovery from its worst post-war recession with €24 billion in tax cuts.

Merkel's new partners, the pro-business Free Democrats (FDP), campaigned in the election promising major simplification of the tax system by drastically cutting the number of tax levels.

The planned tax cuts would add to Germany's mammoth debt pile and put Europe's biggest economy in breach of European Union deficit rules for several years to come, though.

Meanwhile the new government has ruled out major spending cuts, with Merkel saying that this would endanger Germany's nascent recovery and that the growth that the tax cuts will trigger will help cover some of the cost.

The plans have come under fire from all sides in the last week, including from the leaders of some of Germany's 16 states, the Bundesbank central bank and the country's main employers' federation.

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Schäuble, 67, a veteran conservative, admitted that he was in a "complex situation," particularly in light of a constitutional amendment limiting the budget deficit pushed through by Merkel in her first term.

"Anyone who was constitution minister as long as I was will make very sure that the constitution is adhered to. And as such a dedicated European, I know that sticking to the EU stability pact is of decisive importance for Europe," he told Handelsblatt.

"If Germany didn't take the pact seriously, then we would really have a problem in Europe."

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Your comments about this article

18:09 November 2, 2009 by Portnoy
How does this man stay in government? How about tax reform as a tool for economic recovery? I guess the only tool here is him.
23:47 November 2, 2009 by Logic Guy
Well, if Germany were to based their economy on efficiency, then I'm believe that the country would stabilize and enter a slow, but consistent pattern of growth.

I strongly believe that this is true, because other financial and budget concepts have never been successful.

Why not try something new?
00:26 November 3, 2009 by Bushdiver
We all knew this was more bullshit election promises. Tax reform in Germany. You've got to be joking.
16:21 November 3, 2009 by berlinski
Yada Yada Yada! Heard it all before. Could have written this article before the election.
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