Angela Merkel sets out her election manifesto

11th July 2005, Comments 0 comments

11 July 2005, BERLIN - German conservative opposition leader Angela Merkel unveiled her election platform Monday, which she hopes will propel her to becoming Germany's first woman chancellor in the nation's poll likely in mid-September.

11 July 2005

BERLIN - German conservative opposition leader Angela Merkel unveiled her election platform Monday, which she hopes will propel her to becoming Germany's first woman chancellor in the nation's poll likely in mid-September.

But the manifesto, which includes controversial plans to hike VAT and free up the nation's strict hire-and-fire rules, met strong criticism, with business, government and union leaders pouring scorn on her plans.

"We want to give our country chances," said Merkel, when releasing her 38-page election programme at a joint press conference in Berlin with Edmund Stoiber, the Premier of Bavaria and leader of Christian Social Union (CSU). The CSU is the Bavarian-based associate party of Merkel's Christian Democrats (CDU).

With only about two months to go before Germany's early election, opinion polls show the 50-year-old Merkel with a commanding lead over Chancellor Gerhard Schroeder's ruling Social Democrats (SPD).

But polls also point to a surge in support for the hard-left compromising the post-communist Party of Democratic Socialism partly and the so-called Election Alternative for Labour and Social Justice partly at the expense of Merkel's Christian Democrat-led opposition.

As a result, she appeared to step back from the rigorous reforms that many industry leaders might have hoped for and instead sought to promote a gentler side to her party's platform.

"Edmund Stoiber and me are also people with a heart," declared Merkel, whose previous campaigning for a radical economic makeover of Germany has led to parallels being drawn between her and former conservative British Prime Minister Margaret Thatcher.

Reflecting the disappointment of German business, the president of Germany's Chamber of Commerce and Industry Ludwig Georg Braun lashed out at Merkel's blueprint for spurring growth in the nation.

"So as it stands now that there is to be a tax hike at the beginning and not the structural reforms of the labour, health, care and pension insurance," Braun said.

The opposition's Chancellor-candidate has also proposed allowing companies to withdraw from the nation's system of industry-wide pay settlements, a move which could trigger conflict with Germany's powerful trade unions.

The proposed changes, said Frank Bsirske, head of Germany's service sector union, Verdi, opened up employees and company works councils to blackmail.

What could prove equally unpopular are Merkel's proposals for healthcare reform, which are based on the introduction of a flat-rate premium for each insured adult.

With the London terrorist attacks having pushed security back onto Europe's political agenda, Merkel's election platform also calls for tougher anti-terror measures.

But while both Merkel and Stoiber has been insisting she wants to introduce more honesty into government, her proposals to raise the VAT rate have been met with anger from the country's hard-pressed retailers.

A "poisonous toad", was how Hubertus Pellengahr, spokesman for Germany's Retailers Federation (HDE), described the planned VAT increase.

"Under Mrs Merkel everything will be more expensive, but not better," said Schroeder, who also questioned how the programme could be financed.

Merkel's plan is to use revenue generated by increasing VAT from 16 per cent to 18 per cent to help cut labour costs in Germany, which economists see as hindering job creation in Europe's biggest economy.

In particular, Merkel wants to use funds raised from the VAT hike to reduce unemployment insurance from 6.5 per cent to 4.5 per cent.

She is also proposing a cut in corporate tax from 25 per cent to 22 per cent. This, however, falls short of the 19 per cent that Schroeder was proposing to introduce.

Apart from strengthening the Washington-backed security group NATO, a Merkel government would also seek to reinvigorate relations with the U.S., which were strained due to Schroeder's opposition to the war in Iraq.

The manifesto also confirmed the opposition's long-held stance on Turkey, essentially ruling out European Union (E.U) membership for Turkey and instead proposing privileged partnership for Ankara.

Merkel sees the current drive to E.U. membership as coming to an end with Bulgaria and Romania, which are due to sign up to the Brussels-based bloc in January 2007.

Schroeder has moved to bring the election one year forward after a humiliating defeat for his party in a May poll in the state of North Rhine Westphalia, which was once an SPD stronghold.

But with German unemployment coming in at 11.6 per cent in May and after a protracted period of sluggish growth, measures to shore up the economy and to create jobs are likely to be at the forefront of the campaign for the election, widely expected to be held on September 18.

However, the increase in VAT, which if she is elected would come into force on January 1 2006, would not be accompanied by any immediate moves to ease the income tax burden.

This would not happen until 2007, when a CDU-led coalition government would launch another makeover of Germany's complicated tax system by cutting the top tax rate from 42 per cent to 39 per cent and the basic rate from 15 per cent to 12 per cent.

In addition to making it more attractive for firms to hire the unemployed and temporary workers, she also wants to further liberalise Germany's redundancy laws to help smaller companies with up to 20 employees to fire workers.

This represents an extension of the reforms introduced by Schroeder that make it easier for companies employing up to 10 workers to dismiss employees.


Subject: German news

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