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German coalition agrees tax cut plan

07 November 2011 10:20 (UTC +04:00)

Baku. Vahab Rzayev â€“ APA-Economics. Chancellor Angela Merkel agreed a comprehensive tax cut plan on Sunday evening in an effort to resolve an internal coalition dispute between her Christian Democratic Union (CDU) its Bavarian CSU allies, and the Free Democratic Party (FDP). The leaders of the three coalition partners â€“ including FDP leader Philipp RÃ¶sler and Horst Seehofer, head of the CDUâ€™s sister party the CSU â€“ found compromises on five key areas that have caused conflict in the government. The chancellor said the aim of the package was to relieve the tax burden on small and medium incomes by â‚¬6 billion in two stages - on January 1, 2013 and January 1, 2014. The measures would include lifting the lower threshold for a tax-free income. The plan broadly follows an agreement reached between Finance Minister Wolfgang SchÃ¤uble and Economics Minister Philipp RÃ¶sler in October to address "bracket creep" in the tax system, where inflation pushes people into higher tax brackets. Merkel said the tax cuts came under the heading â€œStrengthening growth in Germany,â€ and would make the system fairer, though she emphasized that consolidating the state budget would remain a priority, and Germanyâ€™s constitutionally-agreed debt ceiling would not be broken.