Merkel to campaign in election on tax-cuts platform

Jun 28, 2009, 16:09 GMT

Berlin - German Chancellor Angela Merkel is to campaign for re-election this September on a tax-cutting platform, after rebuffing fiscal conservatives in her ruling party on Sunday.

Front-runner Merkel huddled in Berlin with 100 top figures in her own Christian Democratic Union (CDU) and their Bavarian ally, the Christian Social Union (CSU), to sign off on campaign policies.

The chancellor flatly rejected calls to increase Germany's sales taxes to offset income-tax cuts.

'I will not increase value-added tax (VAT) in the life of the next parliament,' she said bluntly after the meeting. 'Right now we don't need sacrifices, we need moderate cuts.'

Merkel loyalists slapped down calls from two state premiers, Guenther Oettinger of Baden Wuerttemberg and Wolfgang Boehmer of Saxony-Anhalt, to frankly tell the public about sacrifices needed to finance any tax cuts.

Neither maverick premier showed up for the meeting in Berlin of the two parties' central boards.

As the recession cripples some of Germany's biggest companies, much of the centre-right has concluded that the run-up to the September 27 poll is no time to press longtime CDU demands to balance Germany's budget.

The two parties unanimously adopted a 60-page document setting out the joint CDU/CSU policies this September, including tax cuts for the poor and middle class and government support for renewable energy.

Merkel left the date of her planned tax cuts vague, rejecting pressure from the CSU's populist leader, Bavarian Premier Horst Seehofer, to commit to implementing the cuts in 2011.

The chancellor aims to break out of an uncomfortable coalition with the centre-left Social Democratic Party (SPD) and form an alliance after the election with the pro-business Free Democratic Party (FDP).

Merkel and Seehofer said the FDP was the coalition partner they preferred.

The SPD, which is seeking to increase taxes on the well-off, has suffered a slump in public support.

Seehofer, who has sometimes chafed with the CDU in the past, declared 'full support' for Merkel's re-election and assailed the ideas of premiers Oettinger and Boehmer as 'incredible.'

Analysts said Merkel was determined to avoid a political misstep by the CDU in 2005, when fiscal conservatives in the party insisted the public needed to know where the money for tax cuts would come from.