Anger in German states at Berlin's tax-cut plans

Nov 1, 2009, 16:48 GMT

   Berlin - Opposition was growing in Germany's 16 states on Sunday to plans by Chancellor Angela Merkel's federal government for massive tax cuts that would deepen the country's public deficits.

The states, which collect most of Germany's income and consumption taxes and remit a fixed part of the revenue to Berlin, fear they will not be able to pay for their schools, police, roads and housing.

State premiers belonging to Merkel's own party, the Christian Democratic Union (CDU), have grumbled at the tax plans, and made their worries plain Friday at a national meeting of state premiers.

The deep cuts had been urged by the Free Democratic Party (FDP), Merkel's new federal ally, in coalition talks completed last week, with the backing of the Bavaria-only Christian Social Union (CSU).

But FDP politicians serving in state-level governments made plain Sunday that they too were hostile to swingeing cuts in personal income and sales taxes. The small FDP is in coalition with the larger CDU in several states.

   The FDP leader in Hesse state, Joerg-Uwe Hahn, who is deputy premier there, said the states' finances were at risk.

'We need to reform taxation, but this should not happen on the back of the states alone,' Hahn told a Berlin newspaper, Tagesspiegel, in remarks to appear Monday. 'I've sworn an oath of office to Hesse. It's my employer, not the FDP.'

In Schleswig-Holstein state, where the FDP also co-rules, FDP parliamentary group leader Wolfgang Kubicki predicted the states would resist the federal coalition over the cuts.

'The state coalitions won't just go along with everything decided at federal level,' he told the news magazine Der Spiegel. 'It's not acceptable for the states to put up with huge revenue losses.'

Other state premiers hinted last week they might challenge the Merkel government's tax plans as unconstitutional.

   Foreign Minister Guido Westerwelle, who is FDP leader, called for opponents to accept the cuts.

'Those who are trying to bail out' must accept that the cuts were federal coalition policy, he said.