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Lindner: Income tax cut not negotiable

FRANKFURT (Reuters) – German Finance Minister Christian Lindner has said he will not give in to pressure from coalition partners and will withdraw his plans for a multi-billion dollar income tax cut to curb creeping inflation.

Earlier this month, Lindner presented plans for income tax cuts totaling 23 billion euros (25 billion dollars) by 2026. As part of the plan, the tax allowance will be increased in three steps and the income limit at which the highest tax rate applies will also be raised, the Finance Ministry said.

In an interview with the newspaper “Welt am Sonntag”, Lindner, a member of the liberal, business-friendly FDP, said he was facing resistance from his coalition partners, the social democratic SPD and the Greens.

In the interview published on Saturday, he said that under a liberal finance minister, it would not be possible for the government to fail to adjust allowances and tax caps to rising prices.

The cuts are designed to offset what is known as the “fiscal brake,” which is when wages rise due to inflation, which in turn causes people to pay more income tax because they have slipped into higher tax brackets.

Unlike in several other major economies such as the United States, Canada and Switzerland, the thresholds in Germany’s progressive tax system are not automatically adjusted for inflation.

(1 US dollar = 0.9201 euros)

(Reporting by Ludwig Burger; editing by David Holmes)

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