Merkel staves off mutiny to push tax-cut bill through

Fri, 18 Dec 2009

Berlin - German Chancellor Angela Merkel's conservatives narrowly avoided a rebellion on Friday, as Christian Democrat (CDU) state premiers dropped their opposition to a tax cut bill just before a vote in the upper house of parliament. The premiers of the states of Schleswig Holstein and Sachsen, both CDU, said they would support the so-called Growth Acceleration Bill in a vote of the Bundesrat on Friday.

The Bundesrat represents Germany's 16 federal states, and premiers had been concerned that the bill would leave large deficits in state budgets at a time of falling tax revenue.

The bill is seen as a forerunner to a much larger round of tax cuts planned for 2010.

The premier of Schleswig Holstein, Peter Harry Carstensen, said the federal government had agreed to assist the states with their budgetary problems if they supported to the bill.

The bill was passed on December 4 by the lower house or Bundestag, and provides tax cuts and benefits for families and businesses, amounting to 8.5 billion euros (12.2 billion dollars).

Merkel's coalition with the Free Democrats won a general election in September, partly on promises to slash taxes in a bid to lead the economy to a full recovery after the global economic crisis.