Merkel's party details plans to spend surplus German tax revenue

BERLIN (Reuters) - Chancellor Angela Merkel's Christian Democrats (CDU) plan to divide surplus tax revenues equally between infrastructure investment, tax relief, and spending increases on foreign and security policy, a party document obtained by Reuters showed.

The plan - to be debated at a meeting of senior party members on Sunday and Monday - will make welcome reading for Germany's European Union peers, who have been pressing Berlin to raise its spending to lift the flagging euro zone economy.

With France, Italy and Spain all butting up against the bloc's budget deficit limits, only Berlin, running a surplus, has the scope and economic weight to make a difference to the euro zone's economic outlook by increasing spending.

"Of the financial margin that we gain from additional tax revenues and low interest rates, we will use a third for each," the document read, listing the investment, tax relief, and spending goals.

Some revenue could also go on debt repayments "where necessary".

The commitment to spend more using additional tax revenues means Berlin will be able to stick to its balanced budget plans, fiscal stringency that has irritated peers who want Berlin to loosen its purse strings to help support euro zone growth.

The CDU document - 'Orientation in difficult times - For a successful Germany and Europe' - is the main resolution to be debated by the executive of the conservative party.

It includes the main points the CDU party leaders want to pursue next year in an election manifesto with their Bavarian allies, the Christian Social Union (CSU).

CDU Finance Minister Wolfgang Schaeuble has been resisting pressure from the European Commission to loosen Germany's fiscal stance next year.

Germany has planned on a balanced budget over the next four years, but stronger-than-expected growth could generate additional tax revenues. Last month, the government raised its growth forecast for this year to 1.8 percent from 1.7 percent.

The CDU said it backed further increases in spending for both domestic defence, and to strengthen the security and defensive structures of NATO and the European Union.

"Germany will play a decisive role in further development of the European Union's joint security and defence policy," party leaders said in the paper.

"For us there is no contradiction between a strong NATO and moves to strengthen the EU; they are two sides of the same coin," it said.

The party said it would seek a balance between security and freedom. The paper backed increasing staffing for security forces and giving them more authority to deal with rapidly evolving challenges, including cybercrime and Islamist attacks.

The CDU also backed efforts to develop a new 5G bandwidth standards and expand broadband coverage across Germany.

"We want to adapt government rules to encourage the testing and implementation of new and innovative solutions in areas such as autonomous vehicles, civilian drones, self-diagnosing health care system and the 4.0 (digital) economy in Germany," it said.

Big data was an area that also required innovative and up-to-date privacy laws, it said.

(Reporting by Andreas Rinke; Writing by Paul Carrel and Andrea Shalal; Editing by Andrew Heavens)