German FM wants quick action on tax relief: Report

The German finance minister had told lawmakers on Tuesday that there was scope to cut taxes by around 15 billion euros

German Finance Minister Wolfgang Schaeuble plans to move ahead with proposed tax cuts as soon as possible and Chancellor Angela Merkel's ruling right-centre coalition could consider an initial tranche of cuts next week, the Bild newspaper reported.

Schaeuble had told lawmakers on Tuesday that Germany had scope to cut taxes by around 15 billion euros after the September 2017 federal election, despite increased spending on migrants.

But the finance minister wants to kickstart the process by enacting some tax cuts at the start of 2017, with the rest to follow in 2018, Bild said.

"We want to approve the tax relief quickly," Schaeuble told the newspaper. Chancellor Angela Merkel's Cabinet would consider the first steps at a regular meeting on Wednesday, Bild said.

It said a paper outlining first steps totalling six billion euros had already been given to the parliamentary groups of the ruling parties, which are scrambling to respond to public discontent over the government's open-door refugee policy.

Merkel's party, the Christian Democrats (CDU), of which Schaeuble is a member, faces a tough challenge in the next federal election.

The anti-immigrant Alternative for Germany beat the CDU into third place in a state election in an embarrassing defeat on Sunday, and is poised for a strong showing in the Berlin elections on September 18.

To start, Schaeuble wants to raise the basic tax-free and child allowances in the current scheme, and increase the amount of "kindergeld", or child-raising aid now paid to parents of children younger than 18, and in some cases, 25, Bild said.

Schaeuble told parliament he also planned to cut the burden caused by "cold progression" or bracket creep in the tax system, from January 1, 2017, by around two billion euros.

Thresholds in Germany's progressive tax system are not automatically adjusted for inflation, so recipients of a pay rise can find themselves ending up with a net pay cut.

Bild quoted a spokesman for the Economy Ministry as saying it had not received the finance ministry's plan.

Economy Minister Sigmal Gabriel, a member of the Social Democratic Party that is the junior partner in the ruling coalition, had rejected Schaeuble's tax-cut plans on Tuesday, calling instead for more spending on childcare and education and cuts in social welfare contributions.