Aug. 17 (Bloomberg) -- German opposition leader Angela Merkel named Paul Kirchhof, who has drawn up plans to simplify Germany's tax system, as her finance-policy expert in a team campaigning to oust Chancellor Gerhard Schroeder in next month's election, an official from her party said.

Kirchhof, 62, is a professor of finance at the University of Heidelberg who last October took up a seat on Deutsche Bank AG's supervisory board. Merkel, 51, who heads the Christian Democratic Union, will announce the appointment when she presents the team of experts at a news conference at 12:30 p.m. in Berlin today, said the official, who declined to be identified. The CDU, which is leading in opinion polls, says those on the team of experts would not necessarily be ministers in a Merkel-led government.

Kirchhof, a former judge in Germany's highest court, has been acclaimed by executives and business groups for his tax proposals. Under his plan, all of Germany's 163 subsidies to taxpayers would be scrapped and the proceeds used to cut income tax to between 15 percent and 25 percent.

The nomination of Kirchhof would be ``a magnificent appointment that stands for a recovery and sustained economic growth,'' Juergen Thumann, head of the BDI industry lobby, which represents 107,000 companies including Siemens AG and DaimlerChrysler AG, told reporters yesterday.

Germany's economy, which stagnated in the second quarter, has been dragging down growth across the dozen-nation euro region as consumers rein in spending amid record unemployment. The government can't spend more or cut taxes because its budget deficit has exceeded a European Union limit since 2002.

Eichel Criticism

Kirchhof's ``tax plan, which can't be financed, which can't be applied in reality, means the end of any respectable budget and finance policy,'' Finance Minister Hans Eichel, a member of Schroeder's Social Democratic Party, said in an interview in today's Financial Times Deutschland newspaper. The proposal may violate the constitution as it subjects a nurse to the same tax rate as a hospital manager, Eichel said.

In her election manifesto published July 11, Merkel proposed cutting the top rate of income tax to 39 percent from 42 percent and the bottom rate to 12 percent from 15 percent on Jan. 1, 2007. The reductions will be financed by curbing tax breaks for commuters and for workers who are paid bonuses for Sundays, holidays and night shifts.

The income-tax reductions are smaller than originally proposed in March 2004, when Merkel pledged about 11 billion euros ($13.6 billion) in relief for consumers to help spur economic growth. Merkel also wants to raise value-added tax to 18 percent from 16 percent to pay for reductions unemployment insurance contributions.

To contact the reporter on this story: Rainer Buergin in Berlin at rbuergin1@bloomberg.net.

Last Updated: August 17, 2005 04:03 EDT