Europe

Europe

German gov’t approves budget draft, tax relief

07 July 2011 01:45 (UTC +04:00)

Baku-APA. The German government on Wednesday approved its 2012 budget draft and a financial plan till 2015, while principally agreeing to tax cuts for the lower and middle classes before the country’s 2013 election, APA reports quoting RIA Novosti.

According to the 2012 budget draft, the federal government will see its deficit drop to 27.2 billion euros (about 38.9 billion U.S. dollars) in 2012, boosted by the country’s robust economic upswing and surging tax revenues. Previous estimation in March put the figure at 31.5 billion euros (about 45 billion dollars).

German economy is widely expected to rise more than 3 percent this year, pushed by both exports and domestic consumptions.

However, the financial plan till 2015 forecasted a higher than previously expected deficit from 2013 to 2015, due to an annual expenditure of about 4.3 billion euros (about 6.15 billion dollars) for the cash base of the European Stability Mechanism (ESM), which is planned to replace the eurozone’s current stopgap rescue facility in mid-2013.

The expected federal government deficit will be 24.9 billion euros (35.6 billion dollars), 18.7 billion euros (26.7 billion dollars) and 14.7 billion euros (21 billion dollars) in 2013, 2014 and 2015 separately.

Based on strong economic growth and falling government deficits, the German coalition government principally agreed to tax cuts for lower and middle class population by 2013, the next general-election year.

The cuts were been promised by the government’s junior partner Free Democratic Party (FDP) during the 2009 election.