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Germany: FDP Demands Further Tax Cuts For 2011

by Ulrika Lomas,, Brussels

23 December 2009

Despite the dire state of Germany’s current finances, and with the tax cut plans of the government only very recently approved in the upper house of parliament, the Free Democratic Party (FDP) is back on the offensive, demanding further tax cuts for 2011.

Indeed, Economics Minister Rainer Brüderle (FDP) has already announced that another tax reform will take place in 2011, and that a graduated system of income tax will be introduced, designed to relieve the burden on small- and middle-income earners by a further EUR20bn.

Brüderle is convinced that a second wave of tax reform will undoubtedly take place in Germany in 2011, thus honoring both the party’s pre-election pledge, and the commitment undertaken in the coalition agreement.

Defending the government’s recently adopted growth acceleration law, containing tax relief measures estimated at around EUR8.5bn a year, Brüderle underlined the fact that the government’s emergency program, or “Sofortprogramm,” aims to return the country to a sustainable growth path, and is, therefore, a secure investment in the future.

Justifying the record new debt in Germany over the coming year, Brüderle explained that, given the current economic climate, it is more prudent to press ahead with stimulus measures. The government should only begin to consolidate the budget, to save and to reduce state expenditure in 2011, he added.

The Deputy Chairman of the Social Democratic Party (SPD), Olaf Scholz, has, however, warned of the dire consequences for both the federal and the state budgets of implementing tax cuts. Scholz highlighted the fact that there is currently no scope in Germany for tax cuts. Not only is the country heavily in debt, but the European Union has also already threatened to issue a deficit procedure, he declared.

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