Schroeder proposes corporate tax cut to boost economy

German Chancellor Gerhard Schroeder has been defending plans to kick-start the economy and reverse rising unemployment in a speech to the Bundestag. The measures were presented as an extension of “Agenda 2010”, which was introduced by the government two year ago. The package includes a series of unpopular benefit cuts. Schroeder told members of parliament that unemployment, which has risen above 5 million, was Germany’s biggest challenge today.

At the heart of the new measures are moves to ease the burden on German companies, which currently pay the highest taxes in Europe. Schroeder has proposed to cut the corporate tax rate by six points, from 25 to 19 percent. Germany’s budget deficit has violated European Union rules for three consecutive years.

Schroeder needs the backing of the opposition, which has a majority in the upper house. He is meeting conservative leaders Angela Merkel and Edmund Stoiber for talks later. The Chancellor is hoping for a boost ahead of a crucial election in May in the state of North Rhine-Westphalia. The ruling Social-Democrats have been losing ground there after 39 years in power.

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