German Social Democrats win few friends with plan

20th April 2009, Comments 0 comments

The Social Democratic Party pledged to boost the highest tax rate, for people earning more than 125,000 euros, to 47 percent from 45 percent and to cut the lowest rate to 10 percent from 14 percent.

Berlin -- Germany's Social Democrats Sunday presented their plan to oust Chancellor Angela Merkel in the next election on September 27 by raising taxes on the rich while cutting them for the less well off.

However, with the handling of the economic crisis set to be a major battleground in the campaign, the tax plan -- aimed at boosting the party's flagging poll ratings -- drew immediate fire from politicians, the media and business groups.

The Social Democratic Party (SPD) pledged to boost the highest tax rate, for people earning more than 125,000 euros (163,000 dollars), to 47 percent from 45 percent and to cut the lowest rate to 10 percent from 14 percent.

The manifesto -- presented by the party's candidate for chancellor, Foreign Minister Frank-Walter Steinmeier -- also offered a 300 euro bonus for taxpayers who do not fill out a tax return to claim small rebates, a move they say will cut red tape.

"Those with strong shoulders must now carry more weight in this crisis," said Steinmeier, justifying the increase in the top rate of tax.

But the leader of the pro-business Free Democrats (FDP), Germany's biggest opposition party, said the SPD plan effectively ruled out an alliance with his party, traditionally "kingmakers" in the country's complex coalition-based politics.

"On this basis, there can be no collaboration," said Guido Westerwelle. Raising taxes might go down well with the Greens and the far-left Die Linke parties, he said, "but not with me."

Even the Greens, the SPD's preferred coalition partner, offered a cool response.

"What the SPD is proposing today is the opposite of what they did during four years in the Grand Coalition. So we have to ask them 'are you really serious?'," the Greens said in a statement.

Unsurprisingly, the conservatives -- the SPD's senior partner in Germany's uneasy "Grand Coalition" government -- also attacked Steinmeier's proposals.

The general secretary of Merkel's CDU party, Ronald Pofalla, dubbed Steinmeier "Wobbly Walter" and said that the SPD "shift to the left is now a done deal."

Pofalla accused the SPD of not only raising existing taxes but also of introducing new taxes. "We want to cut taxes," he pledged.

Steinmeier's proposals also found few supporters in the media or business community.

"Putting a heavier tax burden on the many companies who, at this point in time, really need to strengthen their capital positions borders on economic insanity," the conservative paper Die Welt said.

The Tagesspiegel newspaper attacked the 300 euro bonus scheme for not submitting a tax return. "What will the SPD think of next? How about a bonus for all voters who vote SPD and take a photo at the polling booth to prove it," the paper wrote in an editorial.

The president of employers federation BDA, Dieter Hundt, also slammed the tax plans which he said "fail to achieve the important goal of reducing the burden on the key players in our companies," according to the Bild am Sonntag.

Hans-Peter Keitel, the head of the BDI, another business group, told the Welt am Sonntag: "We need exactly the opposite."

Despite the criticism from all sides, the SPD can point to a poll by Dimap that showed 59 percent of respondents were in favour of raising the top rate of tax.

But the polls in general paint a bleak picture for Steinmeier and the party.

A recent poll put Steinmeier's popularity among voters at an all-time low of 22 percent, compared to 51 percent for his rival Merkel.

Another survey, by the Forsa Institute earlier in the month, put Merkel's conservative alliance of the CDU and Bavarian sister party CSU on 35 percent, with the SPD trailing far behind on 24 percent.

Most political analysts expect the election to result in either another "Grand Coalition" between the SPD and CDU/CSU or a centre-right government comprising the conservatives and the FDP.

"We have better answers than the others," Steinmeier told a crowd of around 2,500 at a party conference in Berlin.

"I want to govern as chancellor," he said.


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