LDN - Business

Take global action on big firms' tax, German pro-business party urges

[October 23, 2017] BERLIN (Reuters) - International corporate giants like Apple should pay more tax, the leader of Germany's most pro-business party said, calling for deeper cooperation within the European Union and in the group of 20 leading economies to bring this about.

Best known as an advocate of tax cuts, the Free Democrats (FDP) are in talks with Chancellor Angela Merkel about forming a coalition government with her conservatives and the Greens.

The ability of international companies to minimize their tax liabilities by booking profits in lower-tax jurisdictions has come under the spotlight in recent years as cash-strapped states struggle to finance expanding social and security liabilities.

The concession by FDP chief Christian Lindner opens up possible common ground with the Greens, whose call for increased environmental and infrastructure spending is at odds with the FDP's calls for strict fiscal discipline.

"I can imagine tax increases," Lindner told the paper. "For companies like Apple. On a European level and in the G20 the structuring of their taxes must be right at the top of the agenda."

While he restated his opposition to tax hikes for the highest earners, the proposal to go after companies' tax management practices creates more space for the unprecedentedly tricky three-way deal, forced on Merkel by her conservatives' losses in a national election this month.

It could also free up funding for other priorities.

Merkel's Christian Democratic Union (CDU) estimated in an internal paper that various proposals put forward in the coalition talks would cost up to 100 billion euros, Die Welt newspaper reported on Monday.

That is more than three times the amount that CDU experts project is available for new projects over the next four years, and four times the amount included in the 23-billion euro coalition contract signed with the Social Democrats in 2013.

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Free Democratic Party FDP leader Christian Lindner gestures during a news conference in Berlin, Germany, September 25, 2017. REUTERS/Wolfgang Rattay/File Photo

"A balanced budget and constitutional debt limits ... require a clear prioritization of the proposals to be decided," the CDU paper said, according to the newspaper report.

It said it would cost 41 billion euros to abolish the solidarity tax as proposed by the FDP, while a "mothers' pension" suggested by the Bavarian CSU would cost around 28 billion euros. A "family budget" proposed by the Greens would cost 48 billion euros, and the CDU itself has already suggested tax cuts that would trim the budget by 15 billion euros.

Lindner maintained the hard line on Greece that his party is known for, saying that any country that took a debt haircut would need to leave the euro zone, suggesting an FDP finance minister would be likely to continue the hard line of outgoing finance chief Wolfgang Schaeuble.

"There cannot be any debt cuts within the euro zone," he said. "In this case, Greece would have to leave the euro zone."

Formal coalition talks between the three camps began on Friday and are expected to continue at least until the end of the year.

Transport Minister Alexander Dobrindt, a member of the CSU, told Bild newspaper that immigration limits, social benefits and the future of Europe remained big areas of conflict.

(Reporting By Thomas Escritt and Andrea Shalal; Editing by Toby Chopra)

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