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Merkel’s FDP Coalition Ally Draws Election Battle Lines on Taxes

Germany’s Free Democratic Party backed the euro and rejected tax increases, aligning its election platform with Chancellor Angela Merkel in a bid to stay her junior coalition ally for four more years.

Delegates at a three-day convention in Nuremberg that ended yesterday heard Economy Minister Philipp Roesler, the party’s head, endorse a renewed alliance with Merkel’s Christian Democratic Union bloc. Polls suggest the FDP isn’t assured of returning to parliament in the Sept. 22 vote. Three national polls show the party’s support at as low as 4 percent, below the 5 percent threshold for seats in the chamber.

“You can see in France how a Socialist government sets off an economic downturn and a dramatic rise in unemployment by raising taxes,” Rainer Bruederle, the FDP floor leader in parliament, said in an interview on ARD television yesterday. “We don’t want to go down that road in Germany.”

As Merkel seeks a third term on her handling of the euro area’s debt crisis, the FDP platform indicates ideological battle lines are being drawn after the opposition Social Democrats and Greens said they would raise income taxes and impose a levy on assets in Europe’s biggest economy.

FDP convention delegates joined Merkel in rejecting the Social Democrats’ labor-backed call for a national minimum wage and said it wouldn’t raise taxes if re-elected. That matches positions laid out by Merkel in an April 26 speech to family entrepreneurs in which she said the FDP is her preferred third- term partner.

‘Strong Europe’

Roesler said the FDP, which flirted with an anti-euro stance at the peak of the debt crisis, stands behind the 17- nation currency and wants “a strong Europe.” Germany is the biggest single contributor to euro-area bailouts.

“To throw out our joint currency out of nostalgia or a yearning for the allegedly good old times is madness,” Roesler said in a speech at the FDP convention on May 4.

While Merkel beats Social Democratic challenger Peer Steinbrueck in popularity ratings, polls suggest neither her coalition nor a Social Democrat-Greens alliance would have enough voter support to form a government if the election were held now. That may lead Merkel to seek a rerun of her first-term coalition with the Social Democrats that included Steinbrueck as finance minister.

To contact the reporter on this story: Tony Czuczka in Berlin at aczuczka@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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