Germany's Wulff Attacks FDP's Tax Cut Plans

by Ulrika Lomas, Tax-News.com, Brussels

20 October 2009

Germany’s future Coalition partners, the Christian Democratic Union (CDU) party and the Free Democratic Party (FDP), once again appear to be at loggerheads over their tax cut plans.

Ahead of fresh talks on finance and taxation, acting CDU Chairman Christian Wulff has urged the FDP to distance itself from its plans for major tax reductions, amounting to around EUR35bn, and to differentiate between what is desirable and what is achievable. According to a defiant Wulff, the FDP must not gamble with the taxpayers’ money.

Rejecting Wulff’s calls for the FDP to renege on its tax cut plans, acting Chairman of the FDP, Andreas Pinkwart, underlined that cutting taxes and fundamentally reforming the country’s taxation are vital for increasing growth, boosting employment, and, in the medium term, generating much-needed additional tax revenue.

Leader of the Union party, Volker Kauder, has indicated that his party’s plans to implement tax reductions of an estimated EUR20bn are still possible. Determined to stimulate growth of the economy, Kauder did not clarify how these tax cuts are to be financed, although he categorically ruled out any rises in health contributions.

The next round of negotiations between the Coalition partners are due to take place shortly, with the aim of drawing up a bill outlining key tax initiatives.

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