BERLIN Oct 22 A festering dispute in Angela
Merkel's centre-right coalition worsened on Saturday when the
chancellor publicly rejected a claim by one of her junior
coalition partners that a tax cut proposal had been scrapped.
Merkel said in a speech in Wiesbaden on Saturday that the
centre-right government was still aiming to cut taxes by 6 or 7
billion euros in 2013, ahead of the next federal election, even
though the Christian Social Union (CSU) allies oppose it.
"There's no way that the plan has been taken off the table,"
Merkel said, referring to the announcement on Thursday by
Finance Minister Wolfgang Schaeuble and Economy Minister Philipp
Roesler to cut taxes in 2013.
Without the support of the CSU, which shares power with
Merkel's Christian Democrats (CDU) and Roesler's Free Democrats
(FDP), the tax cut proposal has no chance of succeeding.
CSU leader Horst Seehofer has rejected the tax cut plan.
The three party leaders met in Berlin on Friday evening to
try to iron out their differences but failed to reach an
agreement -- other than postponing a decision until Nov. 6.
There were also conflicting reports on Saturday about what
happened at the meeting as leaked to Reuters and other news
In an unprecedented move, Roesler even retracted a comment
he made in a newspaper interview with Bild am Sonntag to be
published on Sunday. An advance of the interview was released on
At first Roesler said Merkel "accepted the blame for the
blunder about the coordination with Seehofer." But Bild am
Sonntag later said Roesler had withdrawn the word "blunder" and
replaced it with "misunderstanding".
The messy dispute, drawing ridicule from the opposition that
has dubbed Merkel's government the "chaos coalition", comes at a
difficult moment for the chancellor ahead of crucial meetings on
the euro zone crisis on Sunday and Wednesday.
Even though the amount in question -- 6 or 7 billion euros
in 2013 -- is relatively small compared with the sums at stake
in the euro zone rescue, media latched onto the unusually public
row as a sign of the coalition's demise amid sagging support.
Sources close to Merkel dismissed on Saturday reports she
had apologised to Seehofer that emerged from CSU and FDP camps
for not informing him of the Schaeuble/Roesler tax cut plan.
"There was no 'blunder' and there was no apology," one
source told Reuters. The tax cut proposal announced by Schaeuble
and Roesler was a conscience move "to open the door for a
broader discussion about tax cuts for the public."
Seehofer was annoyed and only learned of their foray on tax
cuts from media reports. "It doesn't work like that, presenting
facts in the public and expecting us to rubber stamp them,"
Seehofer said. "That's just not on."
After long opposing tax cuts demanded by Roesler's FDP,
Schaeuble appeared at the Economy Minister's side to announce
the 6- billion to 7-billion euro tax cuts in 2013. German media
speculated that Schaeuble had caved in to win their backing for
measures to bolster the euro zone rescue fund.
Schaeuble and Roesler want to cut taxes by reducing the
so-called "cold progression", or "bracket creep", in Germany's
tax code that generates billions of euros in revenues for the
treasury because tax brackets are not adjusted for inflation.
The system has not been changed since 1958 and the state
took in an extra 76 billion euros from 2005 to 2010. It has been
taking in about 22 billion euros a year from 2010.
But Seehofer and his Bavarian CSU oppose those plans, saying
there are other ways to reduce revenue that would not require
approval from the upper house, or Bundesrat, where the
centre-right coalition has no majority.
The opposition SPD, who rule the key states of North
Rhine-Westphalia and Baden-Wuerttemberg, have already said the
Roesler/Schaeuble tax cut plan has no chance.