GERMAN 1988 TAX CUTS RAISED BY 5.2 BILLION MARKS
Senior officials in the West German
coalition government said tax cuts planned for next year would
be increased by 5.2 billion marks, in line with a pledge made
by Finance Minister Gerhard Stoltenberg at last month's
international monetary conference in Paris.
    Gerold Tandler, General Secretary of the Christian Social
Union Party, detailing the cuts at a news conference also
attended by officials from the Christian Democratic Union and
Free Democratic Party, said all of the additional 5.2 billion
mark reduction would represent net tax relief.
    An increase in revenue from other sources was not planned.
    The reductions will be added on to a package of tax cuts
already planned for 1988 amounting to some nine billion marks.
    Tandler said three billion marks of the extra tax relief
would be accounted for by reducing the rate of marginal
increase in income tax.
    An increase in personal tax allowances would save taxpayers
1.4 billion marks. Extra tax allowances for people whose
children are being educated would cut 300 mln marks from the
tax bill. A further 500 mln marks would be accounted for by
increasing the level of special depreciations for small- and
medium-sized companies.
    The extra fiscal measures planned for next year are part of
a general reform of the tax system which will come into effect
in 1990. Stoltenberg had said in Paris that part of this
reform, which will cut taxes by a gross 44 billion marks, would
be introduced next year, ahead of schedule.
    The West German government had come under pressure from the
United States to stimulate its economy with tax cuts. But
Stoltenberg said in a speech last night in Hamburg that, while
the economy would continue to expand this year, the rate of
growth was uncertain.
    The government said in January it was aiming for real
growth in Gross National Product this year of 2.5 pct, but some
economists have revised their predictions down to two or below.
    Stoltenberg said: "We remain on a course of expansion.
Whether (this will be) under two pct, as some people believe,
or around 2.5 pct as some others expect, or even closer to
three pct, as the Kiel World Economic Institute forecast a few
days ago, remains open at the moment."
 REUTER
