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UPDATE: Germany Merkel: To Hold Summit On Crisis Dec 2

   (Adds comments by Merkel, vice chancellor; background.) 
 
   By Andrea Thomas 
   Of DOW JONES NEWSWIRES 
 

BERLIN -(Dow Jones)- The German government will hold a meeting with representatives from the country's businesses, banks and trade unions Dec. 2 on how to overcome the economic and financial crisis, German Chancellor Angela Merkel said Wednesday.

Merkel also said the cabinet will work on a plan for a "sustainable, economically viable and environmentally friendly energy supply", to be published by October 2010.

The chancellor's comments came in a televised press conference concluding her cabinet's two-day closed-door meeting in Meseberg to discuss the new government's program.

"We want to reach a consensus backed by all members of society for our target to create more employment, to prevent a credit crunch, and all tasks linked to this," Merkel told reporters.

This was the cabinet's first closed-door meeting since it took office last month. Finance Minister Wolfgang Schaeuble said Wednesday evening in Meseberg that the cabinet had agreed to cut income taxes by EUR20 billion from 2011 and to introduce a simplified tax-bracket system.

The chancellor also said the government will present its 2010 budget to the cabinet Dec. 16, which will then likely be adopted by the lower house in March or April.

The government has agreed to inject EUR3.9 billion in taxpayers' money into the public healthcare system next year, she said.

Notwithstanding Merkel's comments, the government has been relatively unspecific about its plan to extend the lifespan of Germany's 17 nuclear power plants, effectively abandoning a nuclear phase-out scheduled for 2021.

It has yet to outline conditions that will apply to utilities groups that own extended-lifespan plants, notably in terms of how they can spend windfall profits from keeping the sites open.

The government also hasn't said yet how it aims to meet its target of reducing carbon dioxide emissions to 40% below 1990 levels by 2020, or the role it wants renewable energy to play.

Speaking at the same press conference, Guido Westerwelle, vice-chancellor and foreign minister, said: "Tax fairness is no contradiction to healthy public finances. Rather, the one is imperative to the other."

The ruling conservative Christian Democratic Union, the Bavarian Christian Social Union sister party and the Free Democrats have been at odds in recent days over the coalition's tax policy.

While the Free Democrats insist on a far-reaching reform of the tax system, Schaeuble has said there isn't currently any money for such a reform, only for income tax cuts.

The government expects the German economy to contract by 5% this year and 1.2% in 2010.

-By Andrea Thomas, Dow Jones Newswires; +49-30-288-8410; andrea.thomas@dowjones.com

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(END) Dow Jones Newswires

November 18, 2009 09:24 ET (14:24 GMT)


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