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Chance of tax cuts dims as squabble goes on

The Local · 28 Jun 2011, 08:47

Published: 28 Jun 2011 08:47 GMT+02:00

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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.

Story continues below…

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

The Local (news@thelocal.de)

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Your comments about this article

11:00 June 28, 2011 by Bushdiver
It was never a reality to begin with. More pre-election BS that happens every time. Tax cuts for normal citizens aren't in the German constitution.
16:40 June 28, 2011 by dbert4
No....I believe it to be that US style debt and deficits aren't in the German constitution or part of the German mentality. Unless one is talking about the FDP who are Germany's republican equivalent.
16:54 June 28, 2011 by neunElf
The "US style debt" to which you refer are not the result of tax cuts, as each time there has been a cut in TAX RATES, revenue to the government has INCREASED!

If you have 1€, where would it benefit the economy more, by letting a private citizen keep their own money and spending it where and how they wish so that the entire amount entered the productive sector or processing the same money through the government and perhaps having 5 or 10 cents worth of value entering the productive economy after feeding the bloated government bureaucracy?
10:24 June 29, 2011 by dbert4
@NeunElf - Since you're speaking in a US context, I must ask if you believe in the "wisdom" of the private sector still? A job created is a job regardless if it is the result of some action of your cherished "private sector" or the government. The greater economy realizes little from the actions of most American corporations who's main use of capital is to invest in China.
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