Chance of tax cuts dims as squabble goes on

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Chance of tax cuts dims as squabble goes on

The prospect of quick and substantial tax cuts appears to be receding with a key government finance figure warning German taxpayers on Tuesday not to get too excited about future relief.


Steffen Kampeter, the Parliamentary State Secretary for Finance – a junior minister to Finance Minister Wolfgang Schäuble – dampened recent reports of quick tax relief.

His remarks were further signs of a looming tension between Angela Merkel’s Christian Democratic Union (CDU), to which Kampeter belongs, and their junior coalition partners, the Free Democratic Party (FDP), who are pushing hard for cuts.

“The expectations that are being aroused by some voices at the moment are excessive and have the potential to lead to disappointment if they cannot be met,” Kampeter told the daily Rheinische Post.

The Rheinische Post also reported that Finance Minister Schäuble planned to focus hard on saving and reducing debt. The Finance Ministry plans to cut its net borrowing in 2012 to below €30 billion – less than expected.

“We want net borrowing in 2012 to be less than €30 billion,” Michael Fuchs, the conservatives’ deputy parliamentary leader, told the paper.

Schäuble himself has previously downplayed the prospect of substantial tax cuts. However the pro-business FDP is widely thought to be relying on tax cuts as a way to boost it ailing political fortunes.

Daily Bild reported Tuesday it was pushing for fast cuts. The party’s leadership would meet this weekend for a two-day conclave in Berlin to discuss the matter.

The party leaders then plan to advise the government coalition on Sunday afternoon how income tax relief could be delivered – including changes to the tax rates, a higher tax-free threshold and the abolition or reduction of the solidarity tax.

Centre-left opposition Social Democrats leader Sigmar Gabriel on Tuesday called on Schäuble to “exercise his veto in cabinet” on tax cuts – a power he is granted by the constitution. The Finance Minister was the only member of the government who had “not only party tactics in mind,” Gabriel told the Hamburger Abendblatt.

DAPD/The Local/djw


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