Income tax cuts under threat as coalition fails to win opposition support

tax envelopeThe government’s plan to overhaul the tax system and cut income tax rates is in doubt on Tuesday because ministers have been unable to win over enough opposition parties.

The reform package is supposed to cut income tax by €5bn overall.  The two-party coalition government does not control the senate and needs opposition backing to pass controversial legislation. So far opposition parties have not been satisfied with concessions offered by the coalition in return for their support.

The coalition was hoping that the Liberal democratic party D66 would throw its weight behind the reforms. However, D66 leader Alexander Pechtold told the AD on Tuesday morning that the concessions offered to his party do not go far enough.

In particular, the reforms will not deliver enough jobs and do not do enough to increase tax on environment-unfriendly activities, he said.

The Christian Democrats have agreed to support the government but the alliance is still five seats short of a majority in the 75-seat senate.

Efforts to bring the small Christian parties on board floundered when coalition MPs said they could not accept giving an extra tax break to families with stay-at-home wives.

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