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Merkel's CDU Fights Back Over SPD Tax Plans

by Ulrika Lomas,, Brussels

29 October 2013

The business wing of German Chancellor Angela Merkel's Christian Democratic Union (CDU) party has presented its core demands for coalition negotiations, warning against Social Democrat (SPD) plans to raise taxes, to introduce a minimum wage in Germany, and to impose a national tax on financial transactions.

In a clear display of unity and defiance, refusing to be backed into a corner, the CDU's leading business experts issued a joint statement, warning against tax rises, insisting once again that taxes in Germany must not increase as this would be "poison" for corporate investment and destroy jobs.

Alluding to the positive autumn economic forecast for 2014, the CDU's business council, SME parliamentary circle (PKM), and SME union (MIT), made clear that Germany is continuing on its growth path, as the political framework conditions are right. The good economic development is "exclusively" due to the domestic economy, in particular to the willingness of businesses to invest, they argued.

Underlining the need to support this development in the new legislative period, the business wing stressed that "the positive spirals" of high competitiveness, increased employment, lower social spending, rising wages, and higher tax revenues must not be interrupted. The budgetary surplus should be used "purposefully" to consolidate the public finances and to reduce state debt, they added.

The warnings from within the leading ranks of her own party could not have come at a worse time for Chancellor Merkel, just as official talks on forming a Grand Coalition with the SPD have begun in earnest. Merkel had hoped that the discussions would be serene and harmonious, particularly given the SPD's outward claim that it is prepared to compromise, at least on plans to raise the top rate of income tax. The party reiterated, however, that its plans for an FTT, if not at European then at national level, are non-negotiable.

TAGS: tax | investment | business | budget | tobin tax | tax rates | Germany | individual income tax | Europe

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