German business leaders warn of crisis
By Haig Simonian in Berlin
Published: December 15 2002 22:24 | Last Updated: December 15 2002 22:24
The leaders of some of Germany's biggest companies believe their country faces its worst crisis since the war amid deep scepticism about the ability of the government to solve Germany's problems.
Their anger comes as the government of chancellor Gerhard Schröder this week prepares to unveil a unitary 25 per cent savings tax and an amnesty to encourage the repatriation of undeclared savings abroad.
Business leaders, surveyed by the Financial Times and FT Deutschland, its sister paper, fear that rises in taxation and non-wage labour costs imposed by Mr Schröder since his re-election in September will stifle already weak growth.
"Along with the majority of German citizens, I am shocked by the present conceptionless government," said Herbert Hainer, chairman of the Adidas sportswear group.
"Even with the best of intentions, one cannot identify any strategy in the government's plans which could make our country fit for the challenges of the future. Nobody has a clue in this overall chaos."
The business chiefs are also angry about constant changes in tax policy and the government's inability to tackle long-standing structural problems, such as a rule-bound labour market, overstretched pensions scheme and a healthcare system nearing financial collapse.
"Not since the end of the war have conditions been as bad as today," said Alexander von Tippelskirch, head of the IKB Deutsche Industriebank, a business lender.
The problem was also highlighted by Ulrich Schumacher, chief executive of Infineon, who told the Financial Times that the Munich-based semiconductor group would consider moving its headquarters out of the country because German taxation rates, often double those paid by competitors, were placing a dangerous burden on the company.
The results came from a survey of Germany's 100 biggest quoted groups. Respondents included the heads of Bayer and BASF in chemicals, Volkswagen in motors and HVB Group in banking.
The planned savings-tax scheme follows intense wrangling in Mr Schröder's ruling Social Democratic party about ways to plug big gaps in federal and state governments' budgets.
The new moves would come a week after European Union finance ministers failed to agree on a joint approach on taxing savings to curb tax evasion.
A single 25 per cent tax rate on savings would appeal to higher-rate taxpayers who are taxed at source at 30 per cent and then subjected to additional tax at top marginal rates of up to 48.5 per cent.
Differences over tax culminated last week in public clashes between the chancellor and Sigmar Gabriel, the premier of Lower Saxony. Mr Gabriel, a potential successor to Mr Schröder, has demanded the reintroduction of the wealth tax, abolished in 1997, to finance extra education spending.
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