German Finance Minister Hans Eichel has announced a raft of measures aimed at bringing the country’s deficit into line with eurozone rules by 2005. If successful, it would be the first time since 2001 that they have managed this and would give the ailing Stability and Growth Pact a much needed boost. The pact has been effectively in abeyance since a November 2003 decision by the Council not to take action against France and Germany for breaching it.
The proposed measures include a highly controversial move to switch German reunification celebration day to a Sunday instead of a working day plus a pay freeze for civil servants and cuts in ministerial expenditure. The Financial Times quotes Eichel as having said that the measures should bring in 10bn euros in savings.
The German state is faced with lower tax receipts than expected - down from an estimated 188.8bn euros in May to 186.5bn euros. Eichel puts these down to reduced tax revenues from oil alongside reduced demand due to rising oil prices. Tobacco tax receipts have also fallen.
Eichel is urging the Länder to stop blocking federal government proposals to eliminate tax subsidies. By way of example, he referred to tax breaks that are currently given to people who build their own houses.