Coalition parties reach compromise in tax dispute

By MARY CAFFREY

 

BONN, Germany (AP) – Chancellor Helmut Kohl’s party and its two allies, trying to put together a new government after Kohl’s narrow election victory, on Thursday set aside their bickering over how long Germans will have to pay a new tax surcharge.

 

One of the main sticking points in negotiations by the three coalition parties has been whether to put a time limit on a 7.5 percent tax surcharge that Germans must pay after Jan. 1 to help finance the monumental costs of German unification.

 

Kohl’s Christian Democrats and their Bavarian sister party, the Christian Social Union, have resisted demands by the liberal free Democrats that the surcharge be scrapped after three years.

 

The three coalition allies have been feuding over the issues since shortly after Kohl was narrowly elected to a fourth term on Oct. 16.

 

Werner Hoyer, general secretary of the Free Democrats, said the three parties had reached a compromise in negotiations on Thursday.

 

He said that each year the government would examine the tax surcharge to determine whether it is still needed to finance the reconstruction of former East Germany.

 

Hoyer’s support for the idea sounded lukewarm.

 

“Certainly, we would have liked something more,” he told reporters.

 

Hoyer also said the Free Democrats would not accept letting the surcharge become “a cold tax hike that will be in effect for eternity.”

 

The coalition parties hope to finish their negotiations on forming a new government by Tuesday.

 

But the Free Democrats and the two bigger parties are still divided on some key issues.

 

For example, the Free Democrats say foreigners should be able to have dual citizenship. But the two other parties say that would create conflicts of allegiance.

 

The Free Democrats also oppose the two other parties’ proposal that police be allowed to plant eavesdropping devices in the homes of suspected criminals.

 

Still, the three parties have made progress in many areas and will probably be able to wrap up the negotiations by next week.

 

They have agreed to drastically cut state spending, close tax loopholes and keep the armed forces at about 340,000 soldiers.

 

November 3, 1994

 

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