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German FDP shifts from tax cuts to euro stability

Published 04/10/2011, 08:21 AM
Updated 04/10/2011, 08:24 AM

BERLIN, April 10 (Reuters) - Germans are more interested in the euro's stability than tax cuts, the designated new leader of the ruling Free Democrats (FDP) said in an interview on Sunday and hinted his party was shifting away from its tax cut mantra.

Philipp Roesler, who will take the reigns of the junior partners in Chancellor Angela Merkel's centre-right coalition next month, said the FDP now wanted to focus on debt reduction -- moving away from its previous demands for tax cuts.

"If the new tax estimate in May shows revenues are better than expected, then I'd like to use any additional money for budget consolidation," Roesler told the Frankfurter Allgemeine Sonntagszeitung newspaper.

A panel of independent experts will present the government with a new tax take estimate for this year in May. The tax estimate is then used by the government to shape its policies.

"We only have to look at Greece, Ireland and Portugal to see how important it is to have stable budgets," Roesler said.

Portugal bowed to pressure from financial markets and its European partners this week and became the third euro zone country after Greece and Ireland to request financial help from the European Union and the International Monetary Fund.

Roesler, whose FDP has plunged in opinion polls to 3 percent from the 14.6 percent it won in the 2009 election on a campaign pledge to push for lower taxes, said the FDP was still interested finding ways to reduce taxes.

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"But the issue that's interesting people right now is the stability of the euro," he said. "How will lower taxes help them if their money depreciates dramatically? That's especially true in Germany, where a lot of people fear monetary instability."

The FDP, which sees itself as a guardian of German taxpayer interests, has until now been the leading voice inside the German government voicing opposition to euro zone rescue measures. The FDP was nevertheless badly beaten in recent regional elections.

Health Minister Roesler, designated to replace Foreign Minister Guido Westerwelle as FDP chairman and vice chancellor, hinted that the FDP's position may be changing. Roesler will not formally take charge until an FDP party congress in mid May.

Economy Minister Rainer Bruederle also said in an interview in Bild am Sonntag that tax cuts should be put on a back burner.

"Budget consolidation has priority," Bruederle said. "If the budget consolidation continues successfully, we'll have scope for tax relief for the middle class." (Reporting by Erik Kirschbaum; Editing by Jon Loades-Carter)

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