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Schäuble Pacifies German Taxpayers

by Ulrika Lomas,, Brussels

03 May 2010

With no-one quite sure as to precisely how much money Greece requires in order to avoid bankruptcy, and with estimates continuing to soar, Germany’s Finance Minister Wolfgang Schäuble has endeavoured to assuage the growing fears of taxpayers in Germany by emphasizing that any financial aid accorded to Greece should not result in increased costs for the country.

While conceding that the exact figure of Greek debt is as yet unknown, countering claims by Germany’s Economy Minister Rainer Brüderle that approximately EUR135bn will be needed by 2012 (around EUR30bn of which may be expected from Germany), Schäuble explained that the loan does not involve tax money, but merely involves making credit available to Greece in order to keep the country financially solvent.

Justifying the government’s decision to intervene, Schäuble underlined the fact that supporting the Greek government will serve to preserve the stability of the entire euro zone.

With the Greek government currently in discussions with the International Monetary Fund, the European Central Bank and the European Commission regarding the precise figure of the country’s debt, and around EUR9bn required by May 19, Germany is under immense pressure to have an aid package approved by both cabinet and parliament in the coming week.

While acknowledging that German taxpayers benefit from a stable euro, and emphasizing the need to preserve it, President of the German Bundesbank, Axel Weber, has nevertheless called for a significant tightening of fiscal rules within the European Union, warning that the situation in Greece must remain an absolute exception, and that in future, such events must not be repeated.

Vehemently opposed to EU aid for Greece from the outset, the German Association of Taxpayers (der Bund der Steuerzahler – BdSt) has urged the government to lay bare all the facts about the Greek disaster, and has called for a parliamentary debate to take place to discuss the decision carefully and extensively. It maintains that the government’s decision to support Greece was both premature and risk-laden.

Reiner Holznagel of the BdSt, has also warned the government that any decision to provide billions of euros in state aid to Greece, and then renege on plans to cut taxes at home, may prove a bitter pill to swallow.

TAGS: tax | economics | European Commission | fiscal policy | Germany | Greece | Europe

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