German Econ Min Calls For Tax Cuts To Support Economy

BERLIN -- German Economics Minister Michael Glos Friday called on his fellow cabinet members to support tax cuts to help stimulate Europe's largest economy, which is being hit hard by the downturn in global demand.

"Doing nothing can be just as expensive fiscally as a quick, courageous investment in growth and employment," he told the lower house of parliament in a debate on the government's 2009 budget. "The past has told us how fast a downturn can cause a massive hole in public budgets."

Glos called for a cut in payroll and income taxes and urged Finance Minister Peer Steinbrueck, who is one of the most prominent opponents of tax cuts, to support such a move.

"We don't know how long the downward trend will last. Will we then go around the country every six months and hand out money to mend the crisis?" Glos said.

The government earlier this month approved a EUR32 billion fiscal stimulus plan for the next two years, which is set to be approved by the lower house of parliament in December. But calls within the grand coalition parties are mounting for Germany to do more to boost its economy. Other European countries have also criticized Germany for failing to do enough to support the economy.

-By Andrea Thomas, Dow Jones Newswires; +49 30 288 8410; andrea.thomas@dowjones.com