ROUNDUP Schroeder proposes tax cuts, investments to kickstart German economy
Thursday, March 17, 2005 12:28:44 PM
afxpress.com
BERLIN (AFX) - German Chancellor Gerhard Schroeder proposed cutting corporate taxes to 19 pct from 25 pct and invest 2 bln eur in transport projects in a bid to reduce the country's soaring ranks of the unemployed
Schroeder unveiled the measures in a speech to the Bundestag lower house of parliament, adding that he will unveil a radical overhaul of the tax system in the autumn
He said local companies are currently labouring under a higher tax burden than their foreign rivals, adding that "the government will act" to resolve this anomaly
The blueprint for an official tax reform programme is a due to be presented by year-end, "but I am convinced that we shouldn't wait until then"
"I want to send a clear, additional signal for generating higher levels of growth and employment." The eagerly awaited speech was to be followed by a crisis summit later in the day with opposition leaders aimed at considering new ways to create jobs in the eurozone's biggest economy, where unemployment has reached 5.22 mln
In order to fund the tax cut, he proposed to save money by closing tax loopholes, lowering of the minimum taxable income threshold and reducing subsidies, and he called on the opposition to back him
He also said the government will make it more difficult for companies to offset previous losses against tax
"We have to work seriously together to abolish these tax advantages," he said
The 2 bln eur funding injection, meanwhile, will boost "investment in increased mobility and the German construction industry", a sector which is particularly ailing
Schroeder's proposals were immediately condemned as "insufficient" by Christian Democratic Union (CDU) chief Angela Merkel, one of the leaders invited to the job summit
"The chancellor is at best a repair man, but he is no architect of a new social market economy," she told parliament
In a letter to Schroeder that prompted him to organise the summit, the opposition leaders set out a 10-point plan to encourage job creation, including cutting taxes for small and medium-sized companies, creating better legal conditions to encourage employment and lowering unemployment insurance
Turning to specific measures to create jobs, the chancellor announced a 250 mln eur scheme to help people over 50
"Social cohesion for our society is not a luxury that we can simply cast aside in difficult times," he said
About 12.6 pct of the workforce is unemployed in Germany, the highest figures since 1945, according to data from February
A controversial package of measures designed to inject new life into the labour market, known as Hartz IV, was introduced on Jan 1 but it is too early to see its effects
[what is Hartz IV? It sounds like a dog heat worming product on sale in the US - mish]
Mish |
