Conservative German Finance Minister Wolfgang Schaeuble on Saturday played down the prospect of a 16 billion euro tax cut by 2012 which his coalition partners, the Free Democrats (FDP), have proposed. Schaeuble told Der Spiegel magazine the priority would be to sort out local authorities' financing problems, also included in the parties' coalition agreement. "If I look at both issues, I have an idea of what we can possibly introduce during this legislative period and what will be possible at a later date," Reuters quoted Schaeuble as saying. However Schaeuble, a member of Chancellor Angela Merkel's conservatives, said the government was sticking to the coalition agreement. This envisages tax cuts of about 20 billion euros in 2011, but only if the economic situation allows. The FDP has been pushing for tax cuts, arguing they would spur the recovery, but worries about a bulging budget deficit have prompted the government to delay any decision on the matter until mid-May when new tax revenue data is available. "We are in a difficult economic situation and tax revenues are declining. In light of this, we will take a decision when we line up the 2011 budget," said Schaeuble, adding it was unclear if the Bundesrat upper house of parliament would back tax cuts.
