Germany agrees 32 billion euro tax cuts to give economy 'big boost'
By Andreas Rinke and Maria Martinez
MESEBERG, Germany (Reuters) -Germany's coalition on Tuesday set aside weeks of squabbling to agree to a total of 32 billion euros ($34.63 billion) in corporate tax cuts over four years to boost the flagging economy.
A previous attempt to pass the «Growth Opportunities Law» earlier this month failed in what was widely seen as a sign the governing coalition of two socially-minded leftist parties and one economically liberal party was too unwieldy to govern.
«We'll discuss how to achieve a big boost,» Chancellor Olaf Scholz said at the start of a two-day cabinet retreat at Schloss Meseberg, a baroque castle outside Berlin. «The German economy can do more.»
The German economy stagnated in the second quarter, showing no sign of recovery from a winter recession and cementing its position as one of the world's weakest major economies.
According to the draft seen by Reuters, in its first year the stimulus package, modest in the context of a $4 trillion economy, will cause a tax revenue shortfall of 2.6 billion euros for the federal government, 2.5 billion euros for the states and 1.9 billion euros for the municipalities.
The law was championed by liberal Finance Minister Christian Lindner, but then stymied when Greens Family Minister Lisa Paus sought 12 billion euros for child support.
An agreement was reached on Tuesday when the two sides agreed to cut the planned Child Basic Insurance to just over two billion euros.
Lindner dismissed calls for the government to spend to help the economy grow again, saying spending would stoke inflation and corporate tax cuts would have a bigger impact.
Public dissatisfaction with the performance of the coalition is mounting. A poll by Forsa published on
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