German Chancellor Angela Merkel's disputed tax-cut plan has passed parliament. However, critics worry the plan will only worsen the country's rising debt.
Merkel faced stiff opposition from within her own party over the cuts
German Chancellor Angela Merkel won a key political victory Friday as her proposed tax-relief package passed in parliament. The plan includes tax cuts amounting to approximately 8.5 billion euros ($12.2 million), relaxing the tax burden on families with children and cutting sales taxes for hotels.
However, the tax cuts have been strongly criticized by many since Germany, traditionally very fiscally prudent, is already faced with a large amount of debt. State leaders from within Merkel's own party, the Christian Democrats (CDU), had threatened to block the bill.
But the two final states which were potential hurdles, Saxony and Schleswig-Holstein, saw their CDU leaders drop their opposition.
Schleswig-Holstein Premier Peter Harry Carstensen told reporters Friday was “a good day for Germany” and that “the fighting and resistance were worth it.”
Despite the tax relief promised by the government, a recent poll by the Forsa institute shows 69 percent of Germans disapprove of tax breaks at this time.
The global financial crisis has drastically hampered public finances, with Merkel's government predicting the national debt will rise to 85.5 billion euros ($123.12 billion) in 2010.
Editor: Kyle James