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Germany

Tax Reformer Tapped for Finance Post

Angela Merkel has announced she wants to appoint radical tax reform advocate Paul Kirchhof as finance minister if her party wins on Sept. 18. It could radically remake German fiscal policy, conservative supporters say.

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Political novice or right man for the job?

When CDU leader and chancellor candidate Angela Merkel picked Paul Kirchhof, a Heidelberg University professor and former constitutional court judge, as her top finance adviser Wednesday, she signaled that she was ready to move towards radical reform.

"If it is up to me and the coalition talks allow it, he will become finance minister," Merkel said during a campaign stop.

Kirchhof, 62, is best known for a tax reform proposal he presented in 2003 which calls for a flat 25 percent tax for corporations and individuals.

But many financial experts and politicians criticize the choice because Kirchhof, they say, is a political novice and lacks the CDU party connections to run the finance ministry effectively. Merkel's plans could be derailed if Bavarian Premier Edmund Stoiber or a member of the Free Democrats, the likely coalition partner, lay claim to the portfolio.

The post is considered critical because of Germany's fight to cut its debt and lower its deficit.

Must set good example

Kirchhof told the mass-circulation newspaper Bild that if elected, the conservatives would bring the German budget deficit below the European Union's limit of three percent of GDP in the "near future." He also said that Germany must again set a good financial example for Europe.

Kompetenzen der CDU

Angela's A-Team

"I am convinced that government debt is currently the most dramatic problem we face," he said. "It's simply obscene to pass this fundamental burden on to future generations."

Germany breached the EU Stability Pact rules for the third time last year and is expected to do so again 2005. This time, EU finance ministers may decide to penalize the country.

The conservatives have promised to get Germany's deficit below three percent by 2009 and balance the federal budget by 2013.

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