Germany stops tax cuts to pay for flood damage

The German government decided today to delay for a year a round of tax cuts planned for 2003 as it looks for ways to finance the country’s cleanup and rebuilding operation after disastrous floods.

Finance Ministry spokesman Joerg Mueller said the delay in the tax cuts – part of a 2001-2005 tax relief package – would free €7.5bn.

The move is a gamble by Chancellor Gerhard Schroeder who, according to opinion polls, is facing defeat in next month’s general election.