Hermann Gröhe, general secretary of the Christian Democrats (CDU) told B.Z. am Sonntag newspaper that while balancing the budget was the number one priority, the centre-right coalition was still keen for tax relief.

“For the CDU there is a clear sequence: the absolute priority is consolidating the state budget,” he said. “Next year we will bring in important tax simplifications. After that we want to introduce further relief for small and medium incomes – as long as there is room for it.”

Gröhe refused to comment on the possibility of raising tax on the highest incomes. “It is too early to speculate on rates,” he said.

But Social Democrats (SPD) fiscal spokesman Carsten Schneider said Germany’s massive national debt meant there was no room for tax cuts. If the coalition was considering reducing tax, it would risk breaking constitutional rules that cap the country’s debt.

Germany’s better-than-expected economic recovery means that the country’s structural deficit for 2010 will sink from €53.2 billion to €45.5 billion, but Schneider accused Finance Minister Wolfgang Schäuble of not taking constitutional rules seriously.

“The room for new debt in the following years should be reduced accordingly,” Schneider said. “But Schäuble refuses to recognize the effect of the improved development on the budget.”

DAPD/bk