GERMANY: Germany's autumn election has yet to be officially announced but political leaders got down to the battle for votes yesterday, accusing each other of telling "fairy tales" and promising to fulfil voters' "Christmas wishes".
Christian Democrat (CDU) leader Angela Merkel presented a hard-times election manifesto, promising voters an end to mass unemployment and lower taxes, but at the price of job security and tax breaks.
"It's a long time since anyone presented such an honest programme as we are doing today," said Dr Merkel, whose party has a 20-point lead on the ruling SPD in the opinion polls.
Germany needed a "change of direction" she said, and couldn't afford another four years of "more of the same" from the SPD-Green coalition.
But the ink on the manifesto was barely dry before it was attacked by the liberal Free Democrats (FDP), the CDU's likely coalition partner.
FDP leader Guido Westerwelle dismissed out of hand the central proposal to raise VAT from 16 per cent to 18 per cent. He said he would "bring the CDU back to the path of free-enterprise rationality" in post-election coalition negotiations.
Chancellor Schröder dismissed the CDU's manifesto for the same reason, joking: "With Dr Merkel everything will get more expensive but no better."
But Dr Merkel answered her critics bluntly, saying: "There is just no other choice."
The CDU plans to get Germany's five million jobless back to work by loosening redundancy laws and lowering non-labour wage costs, considered job creation deterrents by the party and leading economists.
The proposals would be financed by €16 billion raised from the VAT hike.
A government spokesman dismissed the VAT hike proposal yesterday as "poison for growth".
On taxes, the CDU would lower the top and entry-level tax rates from 42 and 15 per cent to 39 and 12 per cent respectively.
Corporate tax would fall to 22 per cent from today's 25 per cent. These tax cuts would be financed by slashing tax breaks for commuters, home-builders and Sunday shift-workers and by closing tax loopholes for top-earners.
Dr Merkel said the CDU would consolidate Germany's budget by the end of the decade, calling the current government's attempts to loosen the stability pact euro zone guidelines "an extremely dangerous business in the medium to long term".
"We will present a budget in the next parliamentary term that fulfils the stability pact criteria," said Edmund Stoiber, the conservative premier of Bavaria and likely economics minister in a CDU-led government.
The CDU also announced plans to halt the SPD-Green plan to decommission German nuclear reactors, prompting Greenpeace activists to picket a CDU vote on the manifesto yesterday.
Employers' organisations welcomed the manifesto but some economists expressed concerns that it contained no concrete plans to consolidate the budget by spending cuts.
Meanwhile, German president Horst Köhler has asked Chancellor Schröder to clarify further why he is seeking early elections in September.