German Chancellor Gerhard Schroeder rejected charges on Sunday that his government's economic reforms were favouring the rich, saying a majority of tax revenues came from the top 10 percent of wage earners.
Schroeder said in an interview with RBB radio that tax rates for low-income workers had been cut as much as for those with high incomes during the six years he has been in office and that lower and middle-class workers paid only a small share of taxes.
"As far as fairness in our tax system is concerned, let me point out that the 10 percent with the highest incomes pay 54 percent of tax revenues in Germany," said Schroeder, who has come under attack for plans to trim unemployment benefits.
"And the 50 percent at the lower end of the income scale pay nine percent of the tax revenues," said Schroeder, whose centre-left Social Democrats have slumped amid protests his reforms place a heavy burden on the poor.
"In essence, the tax system is okay, although one could always make it even fairer."
Schroeder said the income tax rate for low wage earners had been cut to 15 percent from 25.9 percent when he took office in 1998. The tax rate for the highest wage earners has fallen to 42 percent from 53 percent.
"When I came into office the entry level tax rate for those was 25.9 percent and now for those who are blessed with big paycheques it's 15 percent," Schroeder said.
PRESIDENT CRITICISED FOR EAST-WEST REMARKS: German President Horst Koehler faced sharp criticism on Sunday for speaking out against efforts to even the standard of living across the country, saying that would cement state subsidies and burden future generations.
East German regional leaders attacked Koehler, arguing that the former communist region would fall further behind the prosperous western region without generous state supports.
"The goal of narrowing the gap between the east and west must remain so that living standards approach each other," said Thuringia's Christian Democrat state premier Dieter Althaus.
Fourteen years after unification, westerners have been complaining about the costs of rebuilding the east. More than a trillion euros have gone to the region, annoying westerners faced with cutbacks in the generous welfare state.
"Koehler is giving ammunition to westerners who say the east has already got enough," said Christoph Matschie, leader of the SPD in the poor eastern state of Thuringia.
"Obviously there will always be regional differences, but for me it is a question of how much," said Matthias Platzeck, state premier in the eastern state of Brandenburg. "I can't accept a region will permanently have 20 percent unemployment." Koehler said in an interview with Focus magazine that there were differences in living standards all over Germany.
"That's the case from north to south and west to east," said Koehler, former head of the International Monetary Fund. "Anyone who wants to flatten those out will only cement a subsidy state that will place unacceptable burdens on the younger generation."