Germany: IFO contradicts Merke - taxes have to mountl

ntv

Munich's Ifo institute for economical studies anticipates tax increases and cuts in the social welfare sector for the economical crisis. Tax cuts like christ dems and lib dems are promising are not realistic. German chancellor Merkel announced yesterday taxes should be cut to power the economy.

"For the crisis, relief isn't necessary but instead tax increases"IFO head Sinn told paper welt. "To pay the tax debts we need to raise taxes and cut expenses in the social sector."Anyway, Germans will have to tighten their belts.

Though the recession is on,Sinn doesn't fear social unrest. Germany is the isle of the lucky ones -thanx to the social welfare. Social welfare is a stabilizing factor. 42% of the adult Germans live by transfer income. On the one hand its disturbing. On the other, this group is protected from the consequences of the crisis.

Just yesterday the German chancellor stressed that the sales tax wont be increased furthermore. On radio television luxemburg (RTL) Merkel said that currently tax increases arent the right sign. Instead, taxes should be lowered in the upcoming time.

Christ Social head Seehofer inched a bit closer to the position of Merkel by making tax cuts dependent on the economical situation. The Lib Dems still position themselves with a general tax reform. Leading Social Dem politician see no space for tax cuts.

Tax cuts without a date

Merkel said for the start of the Christ Dem Europe-election-campaign (7.june is election date) that only investment into the future and tax cuts prepare the exit from one of the worst crisis of the past 60 years. "Tax cuts, future-investment and solid budgets fit together for us" Merkel said. Merkel and Seehofer were united on the idea (according to Spiegel) not to announce a certain date for tax cuts in their election program. Seehofer told Handelsblatt:" Growth has to occur so tax cuts are possible. In this point he totally agrees with Merkel."


Tax cuts will only be reasoned with the need for growth in the election program - after the peak of the crisis has passed - according to Spiegel. In Deutlandfunk Seehofer told that if there is growth again, tax cuts and debt reduction have to have first priority. The conservative party program should be approved at the end of june (on a summit) which is valid for the federal election in sep.


Tax Cuts without proper financing


Lib dems intend to relief Germany of 35bio euros. He accused Steinbrueck of cashing into the citizens. "A single one has cashed in and thats Peer Steinbrueck and ahead of him Hans Eichel." Party head Westerwellemade tax cuts a condition for a possible coalition after the election.

Only hot air

Steinbrück called the lib dem plans for tax cuts "grotesque." When the lib dems criticize public debt of the public budgets and at the same time the lib dems admit to two digit billion tax dropouts (u gotta ask yourself whether theyre crazy).