Unavoidable tax hike?
June 25, 2009
The head of the German Council of Economic Experts, Wolfgang Franz, says current economic conditions mean a tax hike accompanied by a roll-back in government spending is unavoidable.
His assessment in the Berliner Zeitung newspaper comes one day after German cabinet ministers approved next year's budget and government finance plans for the following three years.
"The cutback on subsidies won't be enough to make up for the increased spending," Franz said. "That means there will be higher taxes."
Germany's public debt is heading for new record
He also warned that the bonus the government is paying to customers who scrap older cars and buy new models will amount to a heavy burden on the books of the finance ministry.
The new budget plans drafted by Finance Minister Peer Steinbrueck are expected to create 310 billion euros of new debt by 2013. The government plans to borrow some 86 billion euros next year alone - the biggest jump in public debt in the history of the federal republic.
ai/dpa/AFP
Editor: Jennifer Abramsohn