Tax Cuts? No Thanks Say Germans

Majority of Germans prefer budget austerity.

An overwhelming majority of Germans would prefer to see more budget austerity to reduce debt instead of tax cuts promised by the government, according to a poll published on July 8.

Asked "Do you think it is more important to lower taxes or reduce new public debt?", 70% of respondents said they preferred austerity compared to 24% opting for tax breaks, in a survey by independent opinion research firm Infratest-Dimap.

The poll revealed deep scepticism about Chancellor Angela Merkel's pledge to cut taxes by an unspecified amount in 2013, the year of the next scheduled general election, and perhaps general unease over the eurozone debt crisis.

Forty-nine percent said the plans were not justified in light of the state of German public finances, with 48% in support of tax relief.

Only a minority -- 36% -- said they were confident the tax cuts would actually be implemented in the next two years while 62% said they did not believe the government's promise.

Even if tax breaks are approved, only 2% thought they would provide "significant relief" for their own household, against 52% who thought they would offer them "slight relief" and 45% who foresaw "no relief."

Germany, the biggest contributor to debt rescues in the eurozone as its top economy, on July 6 forecast an unexpectedly sharp drop in its public deficit in a draft budget for 2012 thanks to robust economic growth. Falling unemployment has cut social costs, and the national deficit is expected to drop to 27.2 billion euros (US$38.9 billion) from the previous estimate of 31.5 billion euros.

The German deficit will have been slashed by more than 17 billion euros in two years from a peak in 2010 which arose in large part from rescue plans needed to pull out of the economic crisis.

But despite the booming economy and relatively healthy public finances, Merkel's government has sunk in the polls due to coalition infighting and a perception that the chancellor has failed to steer a clear course on issues ranging from energy policy to the eurozone debt crisis.

Copyright Agence France-Presse, 2011

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