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German finance minister rules out slashing taxes to shore up economy

German finance minister rules out slashing taxes to shore up economy

A second stimulus package up for discussion in the new year to boost Germany's ailing economy will not include slashing taxes or shopping vouchers, the finance minister was quoted as saying yesterday.
"Those publicly proposing 35 billion euros (US$50 billion) in consumer vouchers are lacking in balance. Those proposing 25 billion euros worth of tax cuts have as little sense of proportion as those pushing for a 50-billion-euro investment program," Finance Minister Peer Steinbrueck told the Passauer Neue Presse regional daily.
Angela Merkel's government unveiled a package of measures in October to boost growth but with Germany entering what economists are predicting will be its worst postwar slowdown, the chancellor has been under pressure from all sides to do more.
On Jan. 5, the heads of Germany's ruling coalition - Merkel's CDU conservatives and the center-left SPD, of which Steinbrueck is a member - are due to discuss additional measures.
Steinbrueck stressed that no concrete decisions would be taken on that day and said it was too early to speculate on the size of the package, which he said would include measures to help the auto industry and remove hurdles to ensure that infrastructure projects are not held up by red tape.
He also said that cutting people's health insurance contributions would be much more effective in putting cash in consumers' pockets than cutting taxes because half of all households already pay no income tax.
Germany's government has angrily rejected calls from economists, politicians from all parties and even from other countries that it is not doing enough to boost its economy, the world's third biggest, which is already in recession.
Steinbrueck went as far as to dub the British government's use of heavy borrowing to boost its economy as "breathtaking" and "crass Keynesianism," referring to 20th century British economist John Maynard Keynes who advocated governments should spend their way out of recession.
"No decisions will be taken on Jan. 5. There are currently different talks going on. I am trying to ensure that we do not totally lose sight of the basic tenets of budget consolidation and fairness towards (future) generations, and that we act with the necessary prudence," Steinbrueck said.


Updated : 2021-01-27 09:15 GMT+08:00