Schroeder Confident Government Will Prevail On Tax Cuts

by Ulrika Lomas, Tax-News.com, London

21 November 2003

In an interview with Reuters ahead of his visit to meet American business leaders in New York, German Chancellor Gerhard Schroeder said he is “confident” that parliament will pass tax cuts planned for 2004, despite the current deadlock on the plan in the German upper chamber.

"All the indications are showing the economic recovery in Germany has begun and we want to do all we can to strengthen that upturn," said Schroeder in a written response to questions, adding that he expects the tax cuts to release an extra 22 billion euros for consumers and businesses beginning in January 2004.

After the conservative opposition objected to the borrowing plans proposed to fund the tax cuts, Schroeder’s expansionist economic policy hit the buffers, and a joint lower house and upper house mediation team is now trying to find a way out of the deadlock. Nevertheless, Schroeder remained upbeat, announcing that: "I'm confident that the tax reform will be completed by the end of the year."

The German Chancellor is keen to use his New York trip to promote his flagship economic reform programme 'Agenda 2010', although he is also likely to use the opportunity to press the US on transatlantic trade issues.

"Germany assumes that the United States will implement the WTO decision," he said. "That includes the dismantling of steel import tariffs as well as the unjustified subsidies for American exporters."

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