• Home
• /
• Business

German minister rules out slashing taxes to boost economy

"Those publicly proposing 35 billion euros (50 billion dollars) 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 programme," 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.

The heads of Germany's ruling coalition -- Merkel's CDU conservatives and the centre-left SPD, of which Steinbrueck is a member -- are due to discuss additional measures next Monday.

The coalition would decide by mid-January about the details in its second stimulus plan, government spokesman Thomas Steg told a press conference on Monday.

"You can assume that the decision will be made in January, you can assume it will be made by mid-January," Steg said.

Steinbrueck stressed that no concrete decisions would be taken next Monday and said it was too early to speculate on the size of the package, while calling for the talks to be marked by prudence.

Media reports have said the second series of measures could be worth from 25 to 40 billion euros.

Steinbrueck told Passauer Neue Presse the second package would include steps to help the auto industry and remove hurdles to ensure that infrastructure projects were 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 reducing 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 January 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.