Kohl, Others Reach Accord on Paying for German Unity

Chancellor Helmut Kohl, after three days of tough negotiations, reached agreement Saturday with Germany’s 16 regional premiers and the opposition on a long-term plan to pay for German unification.

A key element of the deal was the reintroduction of a 7.5% surcharge on income tax from 1995 onward to help cope with a widening budget deficit caused by massive transfers of resources to formerly Communist eastern Germany.

Under the agreement, the government will provide more money to protect core industries in eastern Germany from collapsing and spend more on housing construction and job-creation measures.

Complex arrangements under which richer states give money to poorer ones will also be reorganized.

“We have achieved a result that will enable us to meet the challenges facing us in eastern Germany,” Kohl told a news conference.

In a concession to the opposition Social Democrats (SPD), who have a blocking majority in the upper house of Parliament, the government dropped plans to cut welfare benefits as part of general curbs on public spending.