German Chancellor Angela Merkel and her coalition partners have agreed to stop arguing in public over tax cuts, and delayed a decision on their scope and timing until May at least, coalition sources said.
The dispute over billions of euros in tax cuts has caused tensions in the centre-right government but the three party leaders put on a show of new harmony after their talks.
Merkel, Free Democrat chairman Guido Westerwelle and Christian Social Union leader Horst Seehofer decided late on Sunday to stop bickering about the 20 billion euros ($29 billion) in tax cuts the FDP wants, the sources said.
Merkel, leader of the Christian Democrats, and the other two party leaders will hold off until the next official estimate of tax revenues that is due in May. The leaders want nevertheless want to stick to a coalition deal to cut taxes, the sources said.
Leaders in Merkel’s CDU have warned there is no scope for tax cuts as large as promised before the September election due to a rising budget deficit in the wake of the economic crisis.
The FDP had nevertheless insisted on the tax cuts, putting heavy strains on Merkel’s new centre-right coalition, which has lost public support in opinion polls.
The three leaders made no announcement after their 2-1/2 hour meeting in the chancellery.
But they demonstrated unity after the meeting to journalists waiting outside the chancellery gates when all three got into one car to drive away together to a Berlin restaurant, having arrived in three separate vehicles.
Bild newspaper published a picture on Monday of the three smiling as they sat at a table in the trendy restaurant.
Volker Kauder, CDU parliamentary floor leader, told Bild: “We must stop squawking at each other with something new each day. Otherwise we’re going to have a communication disaster like the (previous) SPD-Greens government had with their labour market reform.”
But it was unclear how long the cease-fire would last.
Michael Meister, a CDU leader in parliament, told the Handelsblatt newspaper on Monday that tax cuts could not be made if they were financed by debt. He said the delay in the decision does not change the fundamental position.
The government has already passed a package of measures worth some 8.5 billion euros in tax relief from this year.