Tuesday, November 22, 2005

News: More Reaction on the Merkel era

From the Current Affairs Desk

If today is the day that we officially get the new government here in Berlin (and who knows what might happen after the last six weeks) then we are about an hour into the Merkel era. The vote takes place in around 9 hours, and although anything might happen, it is probable that she will breeze through the thing and make her own brand of sour-faced history.

That wasn't very nice, was it? But I didn't want her as Chancellor in the first place, and certainly not as the leader of this lame duck coalition. As I posted last Friday, I am extremely doubtful whether the Grand Coalition will last the full term or even make much of a difference in the meantime.

But in the spirit of, well, getting into the spirit of the thing, I decided to take a look at some of the key points in the coalition agreement:

(I took this list from the Guardian article on the agreement here, somewhat confusingly titled 'At a glance' and then subtitled, 'The new government's plans in full')

VAT increase from 16% to 19% from 2007

Madness. The German consumer is not spending so we increase VAT? Also, VAT is like tax on cigarettes or alcohol - it disproportionately hits the pockets of the less well-off.

A rise in the top rate of tax from 42% to 45% for anyone earning €250,000 a year

The lefty in me likes this one, but in an era of open borders, free markets, and off-shore bank accounts, won't the rich just bugger off to Switzerland? They even speak German there.

New workers to no longer get legal protection against redundancy for the first two years of employment, up from the current six months

Now the lefty in me is angry at this erosion of worker's rights but...whisper it...this might actually be a good idea. The German system as it stands sometimes involves near impossible labour laws, especially for mid-sized companies. What they do, in my experience, is hire students or worse interns, who don't pay any taxes nor social insurance and can be somewhat fired at will.

If companies realise they can take a chance on hiring people for a couple of years without the permanent jobs kicking in, they may be inclined to hire more full-time, tax paying workers. Which will bring unemployment down. Maybe. (Tomorrow I will head down to the statue of Karl and Friedrich and beg for forgivenesss).

The abolition of some tax rebates for commuters and homeowners

Ooo...taking cash in taxes. This is an inspirational program alright. Only thing is, they had better get things working otherwise people are going to be really pissed off (as opposed to now, where they are mildly disillusioned. Kind of).

An increase in the retirement age from 65 to 67 by 2035

If the pensions situation doesn't improve dramatically, this will be up to 70 and beyond before we even reach 2035.

The existing commitment to phase out Germany's nuclear power stations by 2021 to be kept

I like this one. Atomkraft? Nein Danke! Hey, it's the 1980s again!

Germany to be a "reliable" partner again with the US and the rest of Europe

What the fuck does that mean? A reliable partner to whom? I think Schroeder was quite reliable for the French, and he didn't seem to overly piss off Russia. So this means the US and the UK then, right? Germany joins the 'Coalition of the Willing'? Hehe, I doubt it. They will continue to send aid and help to wherever needs it, but do you remember the anti-Bush demos a few years back? BEFORE the mess in Iraq? Imagine them trying to send German troops to fight in Iran, or Syria, or Wales, or whoever is targeted next.

So what does 'more reliable' mean? Nothing. Same old, same old.

These are the radical changes Germany needs, according to the election campaign? Increase taxes or decrease tax rebates, make it marginally easier to fire people (welcome to the temporary contract), and be slightly more polite to Bush and Blair when they ask if we want to join them on their next 'escapade' (Gulf War VII: Starring Bruce Willis, trying to claim his own bounty)?

Stumble, compromise, yawn and stumble. Well done Angie. You got there in the end.


Blogger doug said...

These are the radical changes Germany needs, according to the election campaign?

Well it's hardly fair to blame the 'political' class which as a rule has all the WILL of enervated jellyfish.

After all it was the electorate in its 'wisdom' that distributed its votes so poorly that this coaltion of the dweebs had to be established.

You want different results; vote differently.

The thing that I really don't understand is the increased VAT. I know you don't like this idea either but do you have any indication of why this WEAK government would think it was a great idea to discourage consumption in the midst of an already slow market?

7:01 pm  
Blogger gunther said...

Hey Doug, thanks for taking the time to respond.

It's true that the electorate didn't really know what it wanted, and voted accordingly - which I think is typical of the situation in Germany right now. There is a consensus that change is necessary, but how we go about it is where the confusion comes in.

As for the VAT issue, your guess is as good as mine. It is probably something to do with the fact that the government needs to raise money...the SPD wanted tax increases, and they got them - for those earning over 250,000. This, however is as far as the CDU could go in direct tax increases, so they need to do it another way. VAT makes it look like they are not increasing direct taxes, but still add to the coffers of the state.

In the end it is spending that they need to get a grip on, and I have seen nothing in the proposals so far that offers a suggestion about how the Grand Coalition is going to do this. This is a muddle, a compromise that no-one is really happy with, and if they survive the four years I'll be amazed.

10:50 pm  
Blogger BerlinBear said...

I agree on most counts, and, it would seem for the same reasons. You're right about the erosion of workers' right. Normally, the leftie in me would be bothered by that too, but in fact the starting point is so dramatically skewed in favour of the worker that it largely only serves to ensure that companies employ the absolute minimum number of people, because a) the non-wage costs to the company are too high, and b) the company can't get rid of the employee again, even if they prove to be rubbish at their job. Nowhere is this truer than in the case of Beamte. And you don't need to go to many Behörden to see ample evidence that a great many Beamte are either disinclined to or unable to do their jobs and in any other country would long since have been shown the door. Long story short, I think even we lefties can safely be mildly in favour of that particular measure without having to surrender our cards! :-)

8:40 pm  

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