Angela Merkel, Germany's Chancellor has announced this week that she can see no way of making room in the budget for tax cuts in the near future.
Speaking to a German newspaper earlier in the week, Merkel reportedly argued that a balanced budget is "non-negotiable", and that the only possible way they could be discussed is if unexpected surpluses occur in future years.
This news comes just one month after Germany's Finance Minister, Peer Steinbrueck,
announced his intentions to increase the rates of income tax for
the wealthy in a bid to recoup revenue that will be lost as a result of a recent
ruling by the Constitutional Court.
A ruling passed earlier in the year which allowed some German citizens to offset
health contributions against tax led to an unexpected gap in revenue generated
through taxes. It is thought that the losses incurred amounted to as much as EUR6bn.
Mr Steinbrueck explained that: "We will make up for
that in part through new (tax) revenues from higher earners."
This announcement came as an additional disappointment to thousands of German citizens,
who were anticipating the benefits of large income tax cuts due in 2010.
However, Steinbrueck this week insisted that, despite being unable to promise future tax cuts,
the country's economy is definitely "not in a recession".
In an interview with Stern magazine quoted by Forbes, Mr Steinbrueck went on to explain
that although "there are downward risks that I do not underestimate", a recession was not being predicted by the German authorities.
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