Germany's centre-right government on Monday unveiled plans for drastic spending cuts to rein in budget deficits.
Chancellor Angela Merkel and her coalition partner and Deputy Chancellor Guido Westerwelle announced at a joint news conference after a two-day cabinet meeting that the government would slash the budget deficit by more than 80 billion euros over the next four years to comply with the euro group's stability criteria, which demands the euro zone nations keep their budget deficits below three per cent of their GDP.
The government intends to save up to 11.2 billion euros next year and about 19.1 billion euros in 2012.
The measures envisaged by the government include drastic cuts in welfare spending, reducing the number of public service workers by 15,000 from the present 510,000, abolishing tax exemptions and subsidies and axing military spending.
The government also introduced a new nuclear fuel tax on the companies operating the country's atomic power stations.
The new tax is expected to earn annual revenue of 2.3 billion euros.
An increase in income tax or any other taxes affecting the entire population are not being planned, the government announced.
However, unemployment allowance and children's allowance have been reduced.
Chancellor Merkel defended the government's spending cut plans, saying they were needed to strengthen the country's economic foundation.
The global financial and economic crisis has shown that the state finances should be based on a solid foundation.
She said, "I am optimistic that we will achieve that (bring the budget deficit under control) if we implement them," she said.
Westerwelle described the spending cuts as "fair, just and balanced."
