Schroeder Rejects Calls To Speed Up Tax Cuts

by Ulrika Lomas, Tax-News.com, Brussels

16 July 2001

Rejecting calls from business and the opposition, German Chancellor Gerhard Schroeder announced recently that he would not be speeding up the implementation of the 60 billion mark (US$26 billion) tax cut passed last year.

Despite the fact that many are blaming the Chancellor for the state of Germany's sputtering economy, Mr Schroeder stood firm, declaring that he was unable to take economic projections seriously when they are revised every two weeks. 'We will continue with what I have called the policy of the steady hand,' he affirmed.

Throughout most of his first term, Mr Schroeder managed to tread the tightrope between business-friendliness and socialism quite well, and introduced a tax plan which lowered corporate tax burdens and cleared the way for easier mergers and acquisitions activity. However, during the past year, international financial institutions and German business leaders have been becoming increasingly dissatisfied with the Chancellor, particularly in his efforts to modernize the welfare-state economy.

Conservative opposition leader, Angela Merkel, believes that the Chancellor is making a big mistake in failing to heed the increasing chorus of dissent. 'Germany is no longer the engine of growth,' she said. 'The Chancellor has put the brakes on the economic upswing.'

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