The new center-right government led by Angela Merkel on Friday faces his first test since the elections. The Bundesrat, the upper house of Parliament, has to decide about 8.5 billion euros of tax cuts that Chancellor defends against all odds in 2010. However, it faces fierce opposition from various federal states led by his own camp who refuse to share the burden of the first tax cuts in the new coalition brings together conservatives and liberals.
Angela Merkel had to make significant concessions to persuade the representatives of regional states in the Bundesrat, where she has a fragile majority, vote these tax breaks.To join the L?nder whose financial situation is most fragile, such as Schleswig-Holstein, the Government has committed to cover 40% of new spending for education (5.2 billion euros). Berlin will also assume much of the expenditure of employment centers, whose funding is now limited to 10% for the L?nder.
The battle is not won
Last week, the seniors who act as economic advisers of the Government have joined other leading economists in criticizing the draft Berlin taxation. "Even if the government saves massively, these savings will reduce the budget deficit up to 2013, said one of them, Wolfgang Wiegard. From 2014, tax increases are inevitable. "He recommended an increase of VAT to increase revenue.Others 'wise' doubt that the gift tax boost growth as the government hopes, given the strong tendency to save Germans. A few days ago, the Court of Auditors had also estimated that there was no room for tax cuts.
Thursday evening, Merkel seemed not yet assured of winning. Claiming a "total compensation" of the tax shortfall, the head curator of the Land of Saarland expressed at the last minute of his intention to vote no on the package of incentives for growth "in the Bundesrat.