July 2, 2017 / 5:18 PM / 3 months ago

German conservatives to promise full employment in party platform

FILE PHOTO: German Chancellor and head of the Christian Democratic Union (CDU) Angela Merkel and head of Christian Social Union (CSU) Horst Seehofer during the Trudering festival in Munich, Germany, May 28, 2017. REUTERS/Michaela Rehle

BERLIN (Reuters) - Chancellor Angela Merkel’s conservatives will promise to all but eliminate unemployment in Germany by the year 2025 when they announce their 2017 election campaign platform on Monday.

Merkel’s Christian Democrats (CDU) and their Bavarian sister party, the Christian Social Union (CSU), will present their platform for the Sept. 24 election on Monday with other already known policies such as income tax cuts worth 15 billion euros per year and promises to build flats.

“A major point is that we’d like to achieve full employment,” Horst Seehofer, CSU chairman and state premier in Bavaria, said on Sunday on his way into a meeting of the conservative leadership.

The CDU/CSU consider full employment to be a jobless rate of less than 3 percent -- compared to 5.5 percent now. Those “Economic Miracle” levels of unemployment have not been seen in the country since the mid-1970s.

The two parties also want to add 15,000 police officers in the 16 federal states. The sister parties, however, will not agree on a joint position on refugees. The CSU wants an upper limit of 200,000 per year, which Merkel and the CDU rejects.

“We agree to disagree on that,” Interior Minister Thomas de Maiziere (CDU) said in a Bild am Sonntag newspaper interview, referring to the issue that split the two parties badly since some 1 million refugees arrived in late 2015.

The CDU/CSU hold a 16 percentage point lead over the centre-left Social Democrats in opinion polls with a 40-24 lead, but would still need a coalition partner. They rule with the SPD and in the past they have ruled with the Free Democrats (FDP).

The CDU/CSU also will aim to start the next legislative period after the Sept. 24 election with a new investment programme. Sources told Reuters they want to invest 12 billion euros per year by 2021 in expanding broadband.

Bild am Sonntag said the two conservative parties also want to boost the construction of apartments and housing by 1.5 million units.

The CDU/CSU has already announced plans to raise tax breaks for parents with children and introduce construction subsidies to help families that, together with the income tax breaks, would amount to some 24 billion euros per year.

In contrast to the SPD that said on June 19 it would tax the rich more and low earners less in an attempt to win back working class voters, the conservatives want to cut taxes.

Earlier on Sunday, CDU Finance Minister Wolfgang Schaeuble said in a radio interview there could be room to cut taxes by more than the 15 billion euros already announced. Germany has had balanced budgets since 2014 and the government plans to have no new borrowing in its planning through 2021.

Schaeuble told Deutschlandfunk radio he hoped there could be tax relief beyond that already promised 15 billion euro income tax cut.

“We’re planning, all in all, to do more than just correcting the income taxes by 15 billion euros,” he said, referring to plans to reduce the country’s “cold progression” tax increases -- or clandestine tax increases. Germany does not adjust tax brackets for inflation, unlikely many other countries.

Schaeuble said aside from fighting “cold progression”, the Christian Democrats want to support young families to build new housing while also supporting research and development for small- to medium-sized companies.

He said he would like to start dismantling the so-called “Solidarity Tax” in 2020 that was introduced after German unification to help pay for the costs of rebuilding infrastructure in formerly Communist East Germany.

Economists and business lobby groups inside and outside Germany have demanded an overhaul of Germany’s tax system, namely steeper tax relief that would boost consumption and growth and a lower corporate tax rate that would encourage private investments.

The International Monetary Fund and European Commission have said Germany has room to lift investments on hard and digital infrastructure, which would help reduce its current account deficit and benefit weaker euro zone peers.

Editing by David Evans

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