Sun, Oct 19, 2003 - Page 6 News List

German lawmakers approve Schroeder's new tax measures

AP , BERLIN

German lawmakers on Friday approved speeding up a 20 billion euros (US$18 billion) tax cut by a year and trimming jobless benefits in the battle to revive Europe's largest economy, giving German Chancellor Gerhard Schroeder a boost as he seeks unpopular changes in the welfare state.

Schroeder, who left a EU summit a day early for the debate in parliament's lower house, said the result was evidence his squabbling center-left coalition "stands together when it comes to modernizing Germany."

"We need the ability to take action demonstrated here in order to give our country a good future," he told reporters.

In a tense buildup to Friday's vote, Schroeder softened some of the proposals to break dissent among left-wing defenders of the welfare state inside his Social Democratic party and secure his coalition's majority in parliament.

Schroeder launched the limited overhaul of cherished social programs in March with unemployment soaring, the economy in a third year of near-zero growth and his approval ratings in a slump.

Schroeder faces resistance in the opposition-dominated upper house, where his conservative foes have said they will seek changes to toughen the measures.

With its bill to move up the tax cut to Jan. 1 from 2005, the government aims to give the economy an immediate boost.

The lower house also approved measures to increase pressure on the unemployed to take jobs or risk a cut in benefits, changes designed to lower payments for the long-term jobless, and an overhaul of the government's nationwide network of job placement offices to cut bureaucracy and improve job placement.

All are meant to combat a jobless rate stuck above 10 percent, and Schroeder has staked his future as chancellor on winning final approval for the package by Christmas.

Economics and Labor Minister Wolfgang Clement told parliament he hoped the government's overall labor reform efforts would cut the number of jobless by as much as a fifth.

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