Merkel’s allies seeking tax, benefit cuts

Reuters, BERLIN

Wed, Jan 03, 2018 - Page 6

Germany’s Bavarian conservatives are pressing for corporate tax cuts and cuts to welfare payments for asylum seekers, which could complicate talks with the Social Democrats (SPD) on forming a new government.

German Chancellor Angela Merkel hopes to secure a fourth term in office by persuading the center-left SPD to extend the “grand coalition” that ruled Germany for the past four years, even though both blocs suffered big losses in September’s election last year.

Exploratory talks are scheduled from Sunday to Friday next week.

The SPD, which initially wanted to stay in opposition, has agreed to explore the possibility in the interest of political stability after Merkel’s coalition talks with two smaller parties collapsed in November last year. However, SPD officials have made no promises.

Policy papers prepared by Bavaria’s Christian Social Union (CSU), sister party to Merkel’s Christian Democrats, point to difficult negotiations ahead at a time when Merkel and others are calling for quick work to form a stable government.

In a paper leaked last week, the CSU said it wanted military spending to reach NATO’s target of 2 percent of national output, called for a hardline position on immigration and rejected closer European integration, charting a collision course with the SPD.

Now, draft policy papers prepared for a CSU party meeting this week set up further conflicts.

In one paper, first reported by the German magazine Focus, the CSU calls for cuts in corporate tax rates, given US tax cuts and similar moves afoot in Britain and France.

“If Germany does not act, it will in the near future have one of the highest corporate tax rates in international comparison,” the paper said.

Another CSU paper called for cuts in benefits for asylum seekers to discourage more refugees from coming to Germany, the Augsburger Allgemeine newspaper reported on Monday.

Instead of transitioning to higher regular welfare payments after 15 months, refugees would continue to receive the lower basic aid for 36 months.

“We want to reduce social welfare payments for asylum seekers so that Germany does not remain the main magnet for refugees from the whole world,” top CSU official Alexander Dobrindt said.

Former German minister of finance Wolfgang Schaeuble, now president of the lower house of parliament, on Saturday said that he could not rule out a minority government if no deal emerged.

Another alternative would be a new election, but political experts say that could result in further gains for the far-right Alternative for Germany party.