Merkel: $36B tax cut in coalition deal

BERLIN, Oct. 24 (UPI) -- Germany will cut $36 billion in taxes to stimulate economic growth in an agreement between new coalition partners, Chancellor Angela Merkel says.

Merkel, speaking to reporters Saturday, said three weeks of negotiations between her Christian Democratic Union, the Bavarian Christian Social Union and the pro-business Free Democratic Party have resulted in a treaty to lower taxes but also avoid painful spending cuts, The Wall Street Journal reported.

The deal includes an injection of funds into Germany's social security programs and an agreement to extend the lifespan of nuclear power plants, the newspaper said.

Merkel said she and her center-right coalition partners will move the responsibility for banking supervision to the Germany central bank, Deutsche Bundesbank.

"We must pursue growth path, otherwise we cannot generate the needed savings," Merkel reportedly said, asserting that Germany is in a "very critical phase" because of the economic crisis.

The Journal said Guido Westerwelle, leader of the FDP, told reporters a "lower, simpler and fairer tax system" allowing people to keep more of their income will result from the treaty.