No tax rises of any kind in Germany, vows Merkel before election

BERLIN (REUTERS) - German Chancellor Angela Merkel said on Tuesday she was against tax rises of any kind in Europe's biggest economy if she is re-elected in September, a clear indication of where she expects the campaign to be fought.

Dr Merkel has previously said she is opposed to tax increases of the kind proposed by the opposition Social Democrats (SPD), who want to make the wealthy pay more, but the strong comments show she may be thinking more broadly about taxes.

"(For many voters the election is) about a stable euro, jobs - if possible for everyone, a strong economy for our country," Dr Merkel said in an interview with her own conservative Christian Democrats' television channel.

"For that you need reliable conditions. That means tax rises are wrong. Of any kind."

Dr Merkel, who has preached austerity to euro zone countries during the currency bloc's debt crisis, argues that raising taxes will not necessarily yield higher tax revenues.

Although most pollsters expect Dr Merkel to win a third term in the Sept 22 vote, it is unclear if she will be able to continue her centre-right alliance with the Free Democrats, who favour low taxes.

She may have to seek a "grand coalition" with the SPD, and tax policy could be one of the thorniest issues in any talks between the parties.

Dr Merkel nearly squandered a huge poll lead in 2005 by pledging during the election campaign to raise value-added tax (VAT) to 18 per cent from 16 per cent.

The conservatives' lead fell from 42 per cent in opinion polls to 35.2 per cent in the vote, partly due to Dr Merkel's VAT pledge, forcing them into an unwanted partnership with the SPD.