BERLIN—Chancellor Angela Merkel has run into stiff opposition to promised tax cuts from powerful regional leaders in her conservative party who could block the measures in the upper house of parliament next month.
Merkel, whose centre-right government has got off to a rocky start, told a group of conservative state leaders she would not bow to demands to compensate them for losses from new measures to cut 8.5 billion euros ($13 billion) in taxes for next year.
"I'm not going to buy anyone off," Merkel told the state leaders at a meeting in the chancellery, according to a report in Der Spiegel news magazine on Sunday.
Just one month into her second term, Merkel was forced to reshuffle her cabinet on Friday when Labour Minister Franz Josef Jung quit over charges he covered up details of an air strike that killed Afghan civilians when he was defence minister.
Merkel's woes were compounded at the weekend when reports surfaced of the rebellion over her tax cutting plans by state leaders in her own Christian Democrats. Despite large deficits due to economic stimulus measures, Merkel agreed the cuts with her Free Democrat (FDP) partners after the September election.
The CDU state premier of Schleswig-Holstein, Peter Harry Carstensen, threatened to resign over the dispute, German newspapers reported. Without his state's support in the upper house, Merkel's tax relief plans will not pass next month.
"You can't force me to back this," Carstensen told Merkel, Bild am Sonntag reported. "You'll have to find someone else."
Breaking Tax Cut Promise?
CDU state leaders in Thuringia, Saarland, Saxony-Anhalt, Baden-Wuerttemberg and Saxony — fearing that tax cuts will tear holes in their budgets — also voiced opposition to the plan, saying it was irresponsible to cut taxes at a time of deficits.
"We can't cope with the tax cuts," Thuringia's CDU state premier Christine Lieberknecht told ZDF TV. "We can't vote for it. It wouldn't be responsible for our state and the budget."
Saxony-Anhalt's CDU state premier Wolfgang Boeher told the Mitteldeutsche Zeitung daily: "I can't vote for this as it is."
The upper house will vote on the tax cut law on Dec. 18. A separate law giving away 14 billion euros in tax relief in 2010 was passed by the previous grand coalition government.
Economy Minister Rainer Bruederele, an FDP leader, and Bavaria state premier Horst Seehofer, head of the Christian Social Union, criticised the CDU state leaders. They said they had all agreed to the tax cuts in coalition talks last month.
"We promised voters tax cuts before the election and we can't break our promise now," Seehofer told Bild am Sonntag.
Bruederele added: "Nearly all the CDU state premiers were involved in the coalition talks. When you hear what they're saying now it makes you want to rub your eyes in disbelief."
Finance Minister Wolfgang Schaeuble said the government will not make concessions to the state leaders. "We're not playing a game of poker here," he told Der Tagesspiegel newspaper.
($1=.6699 Euro)
