Germany's CDU Demonstrates Support For Merkel's Tax Cut Plans

by Ulrika Lomas, Tax-News.com, Brussels

19 January 2010

German Chancellor Angela Merkel’s Christian Democratic Union (CDU) party has adopted its so-called “Berlin Declaration” (die “Berliner Erklärung”), in which the party has not only confirmed its commitment to the proposed tax cut plans of the coalition government, but also to developing new strategies designed to attract voters.

Despite the final – unanimous – decision taken by the CDU leadership to agree to the declaration, a bitter disagreement nevertheless erupted over the party’s future tax policy shortly before the meeting, with leading party members openly criticizing Merkel’s tax cut plans.

However, Merkel has now confirmed that a decision regarding the precise timeframe for implementation of the proposed tax reform, as well as the scale of the planned reform, will be delayed until after the tax estimate in May.

Merkel has also emphasized that the reform, which, in accordance with the coalition agreement, is due (if at all possible) to enter into force in 2011, will be debated in parliament this year.

During the meeting, Saarland’s Prime Minister, Peter Müller, warned that the tax policy contained in the party’s declaration had to give priority to the country’s debt brake rule, otherwise he was not prepared to sign.

Saxony-Anhalt’s Prime Minister, Wolfgang Böhmer, had also strongly criticized the scale of the proposed tax cuts, maintaining that a tax reduction of around EUR20bn was currently inconceivable.

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