Germany approves austerity measures

German Chancellor Angela Merkel


Source: Press TV
http://www.presstv.ir/detail/140893.html


Germany's Cabinet has approved budget cuts valued at around EUR 80 billion which critics say can hit the poorest and endanger the country.

The measures in the plan include a new tax on passenger air travel but postpone a decision on a planned tax on nuclear-fuel rods until later this month.

The spending cuts include big cuts in unemployment and parental leave benefits between 2011 and 2014.

Based on one of the most controversial measures in the plan, German energy companies will be charged billions of euros in return for extending the lifetime of nuclear power plants beyond a planned shutdown in 2020.

A number of Germany's nuclear power plant operators have warned that the tax on nuclear fuel could make reactors unprofitable and accelerate the country's exit from atomic-energy generation.

"We're doing what we need to do in line with the European Stability and Growth Pact," Finance Minister Wolfgang Schaeuble said after the cabinet meeting.

"In the end, this decision is connected to energy policy," Schaeuble noted adding, “the government is open to further negotiations with utilities on the exact structure of the tax, but the sector will still need to contribute EUR 2.3 billion, whether through the fuel-rod tax or another mechanism."

Tens of thousands of people took part in demonstrations against the austerity package when it was first introduced in June. Many critics say the cuts could endanger Germany, and as a result, affect Europe's economic recovery.

According to a poll by the television channel ARD, 79 percent of Germans believe the plan is not socially balanced.

The package of budget cuts approved by the cabinet must also be considered by the Lower House of parliament, where it is to be debated in conjunction with Germany's federal budget for 2011. Upper House approval is not necessary.