Nov. 9 (Bloomberg) -- German Chancellor Angela Merkel’s Cabinet backed tax cuts of 6.1 billion euros ($9.1 billion) in 2010, steps pledged before the Sept. 27 election to spur growth after the deepest economic recession since World War II.

The planned tax reductions need the approval of Germany’s 16 states, some of which have complained about revenue loss from the measures. Finance Minister Wolfgang Schaeuble said that he’s confident the tax cuts will be force from Jan. 1, he told ARD television yesterday.

The reductions, due to rise to a total 8.9 billion euros in 2012, come on top of about 10 billion euros in tax cuts approved in June by Merkel’s previous coalition of Christian Democrats and Social Democrats.

The 10 billion-euro package focuses on rebates for health and insurance payments. Below is a summary of the latest fiscal package agreed on by the Cabinet in Berlin, as outlined in an e- mail from the Finance Ministry:

-Children’s benefit: 20 euro increase per month per child for low and middle-income families. Tax-free allowance raised to 7,008 euros per annum per child from 6,024 euros.

-Expanding reductions in value-added tax to 7 percent from 19 percent to more services and goods offered by the hotel and gastronomy industry, such as overnight costs.

-Inheritance tax: amendment of law from Jan. 1 to ease inheritance-tax rates for smaller companies. The amendment reduces the number of years heirs need to maintain company staff levels to qualify for tax relief to 5 years from 7 years.

-Company tax: incorporated and private companies can claim more tax relief on losses and on interest payable on loans.

-Bio-diesel: plans to reduce subsidies for farmers who cultivate bio-diesel have been scrapped.

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net;

Last Updated: November 9, 2009 07:03 EST