Berlin to cut national holidayin bid to boost economy

4th November 2004, Comments 0 comments

4 November 2004 , BERLIN - Germany is planning to scrap its unity day public holiday to help boost the economy as the government learned Thursday it faces a tax revenue shortfall of EUR 4.8 billion for this year and next year. The plan to abolish the 3 October holiday introduced in 1990 to celebrate German unification was among a package of measures outlined by Finance Minister Hans Eichel Thursday aimed at raising EUR 8 billion to help plug a growing budget gap. The package includes a pay freeze for civil

4 November 2004

BERLIN - Germany is planning to scrap its unity day public holiday to help boost the economy as the government learned Thursday it faces a tax revenue shortfall of EUR 4.8 billion for this year and next year.

The plan to abolish the 3 October holiday introduced in 1990 to celebrate German unification was among a package of measures outlined by Finance Minister Hans Eichel Thursday aimed at raising EUR 8 billion to help plug a growing budget gap.

The package includes a pay freeze for civil servants and the transfer of the pension liabilities of Deutsche Telekom and Deutsche Post.

Eichel said the "consolidation package" would help keep the country's deficit next year within European Union rules.

Economy Minister Wolfgang Clement said he expected understanding from the German public for the scrapping of 3 October as a national holiday.

But news of the plan has led to a storm of outrage, with members of Chancellor Gerhard Schroeder's coalition government parties joining growing widespread protests.

The government wants to switch the 3 October unity day to the first Sunday of October, with the extra working day projected to bring an additional EUR 0.5 billion into the government's coffers.

Clement said Germany had more national public holidays than other countries, and doing away with one day would "of course help the economy" - adding 0.1 percentage point to gross domestic product (GDP) growth.

However, Angela Merkel, leader of the opposition Christian Democrats (CDU), told Deutsche Presse-Agentur, dpa the idea was "absurd" and showed a "disgraceful" disdain for history.

CDU budget expert Dietrich Austermann said it was a "pathetic" plan, adding: "You should just discuss abolishing a national holiday in France or the United States - what the government is doing is simply embarrassing".

Markus Soeder, general secretary of the CDU's Bavarian sister party, the Christian Social Union, said the plan "shows just what little feeling this government has for Germany and its national symbols".

A statement from the German Trade Union Federation said: "Poor Germany, to think that we cannot even afford a public holiday recalling one of the most important events of our history."

October 3 has been a national holiday since October 1990 and is stipulated as such in the German unification treaty signed with the former East German government following the fall of the Berlin Wall.

However, the government has been looking at every possible way to reduce its budget deficit and plug a shortfall in tax revenues which new figures Thursday showed was swelling.

A government panel of tax assessors says tax revenues this year will be EUR 1.4 billion  short of an estimate in May, while next year's revenue will be EUR 3.4 billion lower than estimated.

Eichel has a EUR 10 billion budget gap to fill as he tries to keep his deficit within euro stability pact limits amid continuing high unemployment and few signs of a real upturn in the economy.

In the new package, he aims to raise some EUR 5.5 billion from Deutsche Post and Deutsche Telekom by assuming the pension liabilities of the two former state monopolies.

Apart from higher unemployment costs, Eichel has been further hit by tax shortfalls on petrol and tobacco, both of which had been slapped with higher taxes to help increase revenue.

Instead it has led to consumers cutting back on consumption. On tobacco, the tax assessors say the large increases in taxes on cigarettes will bring in only EUR 0.15 billion  extra this year instead of Eichel's planned EUR one billion.

The government's deficit is forecast to rise this year to a post-war record of EUR 43.7 billion. The European Commission last week forecast Germany would post a deficit of 3.4 percent of GDP in 2005 after a 3.9 percent overshoot this year.

It would be the fourth straight year that Germany's deficit has exceeded the European Union limit of 3 percent of GDP.

But Eichel pledged that with the new package of measures Germany would not breach the stability pact next year.

DPA

Subject: German news 

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