Germans seek formula to revolve controversy over tax surcharge

 

GERMANY'S ruling coalition will meet today to work out a formula for cutting a controversial income tax surcharge, the chancellor, Dr Helmut Kohl, said after a weekend strategy meeting.

However, the weekly news magazine Der Spiegel said a secret document showed the government actually planned to increase its revenue by reducing tax breaks later in the year.

Dr Kohl said his Christian Democrats would meet their junior partners, the Liberal Free Democrats (FDP), to work out how the "solidarity surcharge" imposed to help pay for German unification should be reduced.

"I am looking forward to a particularly interesting meeting," Dr Kohl said after the strategy session.

Leading figures from Dr Kohl's Christian Democratic Union (CDU) and their Bavarian allies, the Christian Social Union (CSU), attended the session.

Dr Kohl also used the news conference after the meeting to reaffirm his commitment to European economic and monetary union and warn against any temptation to delay the planned 1999 start date. "We have no reason to change the timetable," he said.

Reducing the solidarity surcharge next year is one of the FDP's key themes. Facing three crucial state elections in March, the formula could give the flagging party a vital boost.

But Der Spiegel reported that once those elections are over, the government plans to eliminate a wide range of tax breaks to pull in an extra 30 billion deutschmarks (£20 billion) which could then be used in the fight against unemployment.

Citing a report by Mr Johannes Ludewig, a state secretary in the economics ministry, Der Spiegel said the government intended to scrap deductions for weekend and holiday work, and reduce breaks on business travel.

A government spokesman said I there was no secret list of perks to be slashed. He said the Der Spiegel report consisted of a series of suggestions which had not yet been decided upon.

The magazine said the plans may be discussed today when the coalition meets to put the finishing touches to its action plan to stimulate Germany's economy.