29 April 2013

Bloomberg: Merkel's party shuns 'stone age' Greens amid tax rise pledge

Germany's Greens party backed a campaign platform of tax increases that members of Chancellor Angela Merkel's Christian Democratic bloc said rules out a coalition after national elections in September.

Delegates at a Greens party convention in Berlin yesterday voted through plans to raise the top rate of income tax to 49 per cent for those earning €80,000 ($104,000) a year or more, and to 45 per cent from 42 per cent above €60,000. They also backed a “wealth levy” on the richest to pay down €100 billion of Germany’s state debt over 10 years.

The platform “is a fiscal policy from the Stone Age”, Ralph Brinkhaus, a parliamentary finance spokesman for Merkel’s Christian Democratic Union, said by phone. It would harm Germany’s economy, and “whoever espouses this doesn’t belong in government”, he said.

Less than five months before federal elections that will determine whether Merkel wins a third term, the Greens manifesto distances the party from Merkel’s bloc and aligns with the policies of the main opposition Social Democrats. Germany’s best-selling Bild newspaper, which frequently channels the government, floated a potential coalition between Merkel and the Greens last week, saying in an op-ed that it would be “new, exciting and, if it came to it, worth a serious go".

That option faded with the positions adopted at the Greens convention. Not only did the party recommit to a coalition with the Social Democrats, its partner in government from 1998 to 2005, it attacked Merkel’s leadership during the crisis in the euro area that spread from Greece. Merkel has “shaken the foundations of European unity and solidarity” through her “savings diktat” and her focus on defending German interests, according to the final resolution agreed on by Green delegates.

Merkel said last week that she wouldn’t raise taxes if re-elected for a third term. Neither is there much leeway for tax cuts, she said.

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© Bloomberg