[A-List] Germany: fiscal crisis

["Michael Keaney" <michael.keaney@xxxxxx>]

German tax rise evokes Weimar comparison

Chancellor Schröder faces political and satirical backlash amid claims of
broken election promises

Jeevan Vasagar in Berlin
Thursday November 21, 2002
The Guardian

The German chancellor, Gerhard Schröder, faced angry comparisons with the
Weimar Republic yesterday, after announcing a series of tax measures which
will hit middle class voters.

His government agreed a new 15% tax on share and property sales, a higher
"eco-tax" on heating fuels, and the abolition of a financial benefit for
homeowners.

The president of the German chamber of commerce, Ludwig Georg Braun,
described the measures as "a programme for producing bankruptcies", saying
that tax increases were "fatal" in a period of economic stagnation.

Mr Schröder's former finance minister Oskar Lafontaine joined in the attack
on the chancellor by comparing him to the 1930s chancellor Heinrich Brüning.

In a newspaper column, he wrote: "It is as though Heinrich Brüning has risen
again - the chancellor who caused mass unemployment - and paved the way for
Hitler.

"As they were then, people are uncertain and are spending less and less
money."

The foreign minister, Joschka Fischer, has described as "historically
absurd", the comparison between Mr Schröder and Brüning, who was chancellor
from 1930 to 1932, but there is mounting anger with politicians.

Der Steuersong, the "tax song", a satirical protest anthem by Schröder
impersonator Elmar Brandt, reached No 1 in the German charts this week. The
song ridicules the chancellor for breaking election promises not to raise
taxes.

Its lyrics, including the words "promises that were made yesterday can be
broken today", were printed in place of the conservative tabloid Bild's
usual editorial column on Tuesday.

The opposition rightwing Christian Democrats (CDU) are calling for a
parliamentary inquiry into whether the federal government deceived voters
before the election about the desperate financial situation the country
finds itself in.

However regional governments, including a number run by the CDU, would have
been aware of the financial problems and would have alerted the party high
command. Tom Levine, political correspondent for the Berliner Zeitung, said
Germans were disillusioned with all political parties.

"People feel cheated because before the elections, everybody, not just
Schröder's party said that taxes won't have to go up, pension premiums don't
have to go up, and health insurance is fine and that the finances of the
country were basically sound."

Mr Schröder's tax increases were plastering over the cracks rather than
coming up with a solution, Mr Levine added.

Regional elections in Lower Saxony and Hessen are due in February but
commentators suggest that the Christian Democrats may not benefit from Mr
Schröder's woes because of divisions among the liberal Free Democrats, whom
the conservatives need in order to form governments.