Eichel Says No New Taxes

by Ulrika Lomas, Tax-News.com, Brussels

15 February 2002

Responding to a challenge by the Bavarian Premier, Finance Minister Hans Eichel has denied that it will be necessary for the German Government to increase taxes in order to fulfil his pledge to keep the budget deficit under 3% of GDP.

Germany has faced increasing criticism in the European Union because of its burgeoning deficit recently, and earlier this week at the G7 summit in Ottawa, several members took the opportunity to protest at the harsh treatment meted out by the EU, arguing that the country should not be forced to raise taxes in the middle of a recession.

However, Premier Edmund Stoiber of Bavaria commented this week that with the Finance Minister seemingly unwilling to consider spending cuts, he could see no other way for Mr Eichel to keep the budget deficit below the stability pact ceiling other than by increasing taxes.

In an interview with German newspaper, Bild, Mr Eichel dismissed the Bavarian Premier's claims as 'complete nonsense'. However, it has been reported that the Finance Minister met with a frosty reception from the 16 state premiers in recent talks over the proposed introduction of a 'national stability pact', and the budget deficit is estimated to be at danger point, hovering around 2.7% of GDP.

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