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Hans Eichel

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Hans Eichel (January 2010)

Hans Eichel (born 24 December 1941) is a German politician (SPD). He served six and a half years as Germany's Minister of Finance (1999 to 2005), and served eight years (1991-1999) as Premier of Hesse, home of the financial capital of Frankfurt and the wealthiest state per capita in Germany with an economy larger than Finland, Vietnam and Pakistan.

During his time in office, Eichel played a key role in two landmark reforms - the far reaching reform of Germany's economy (also known as Agenda 2010) and the creation of the G-20 to reflect the rebalancing of world power. Agenda 2010 helped turn Germany from the 'sick man of Europe' into the best performing G-7 economy in the aftermath of the global financial crisis.[1] [2] He also left a notable legacy in the G-20, which he had co-founded, chaired and hosted as it grew to become the most influential global economic body in the world today. [3]

Background

He was brought up in Kassel where he did his Abitur in 1961. He then completed a degree in German, philosophy, political science, history and education at the universities of Marburg and Berlin, graduating in 1970.[4] After that, he worked as a teacher in a Kassel Gymnasium, the Wilhelmsgymnasium.

Political career

From 1975 to 1991, he was the mayor of Kassel, initially gaining the office at the age of only 33. From 1991 to 1999, he was Premier (Ministerpräsident) of Hesse in a coalition with the Greens. The coalition won again four years later and was the first red-green coalition to serve two consecutive terms. However, he unexpectedly lost the state elections in February 1999 to Roland Koch's CDU and lost his office. However, in March Oskar Lafontaine resigned as German finance minister and Eichel replaced him a month later. Eichel also served as President of the Bundesrat from November 1998 to April 1999. He has been a member of the Bundestag since 2002, but has announced to retire in 2009.

At the beginning of his term of office, he tried to decrease the German federal deficit and wanted a balanced budget until 2006.[5] Initially he was successful and earned the nickname Iron Hans[6] or Iron Minister[7] because of his ability to exercise strict budget discipline. Despite initial success, due to constraints by the cabinet and by the worsening economic situation after the short boom in 1999/2000, he had to abandon these plans. Moreover, during the 2002 election campaign when the SPD was suffering from bad opinion poll figures, it was speculated that Eichel could become Vice Chancellor under a new Chancellor Edmund Stoiber.[5] Schröder was not happy with this and though he was kept as minister in the cabinet, Eichel had fallen from grace. After the election Eichel had to recalculate the budget due to the deteriorating economy and found that he would have $18 billion[8] less in tax revenue than was anticipated. The German budget deficit soared to 3.8%, the highest revenue shortfall among all the EU members at the time (also exceeding the 3% ceiling set by the EU's Stability Pact). Until 2005, when he stepped down, Eichel was unable to reduce the deficit to under the 3% stability threshold.

Controversy

After the tax reforms of 2001 and 2002, the German banking industry association sent Eichel's internal revenue ministry three letters in total in late 2002 and early 2003 warning about a tax loophole allowing investors to receive more than one tax reimbursement for a single short (finance) transaction. Depending on how many times investors short sold a share in a period of 48 hours after a dividend disbursement, tax refunds were erroneously paid out up to four or five times for that single short-sell transaction. Eichel's ministry took no corrective action in response, and from that time forward, gradually larger and larger amounts of forfeited tax revenue resulted.[9]

References

  1. ^ http://www.theguardian.com/business/2003/mar/06/globalrecession.germany4
  2. ^ http://www.economist.com/news/special-report/21579145-ingredients-german-economic-success-are-more-complex-they-seem-dissecting
  3. ^ http://www.treasury.gov.au/Policy-Topics/Economy/G20
  4. ^ "Eichel, Hans Biography". S9. Retrieved 2012-09-13.
  5. ^ a b Alexander Kohnen, Verena Töpper. "Wie aus Büroklammer Eichel der Spar-Hans wurde". MACHTMASCHINE. Retrieved 2012-09-13.{{cite web}}: CS1 maint: multiple names: authors list (link)
  6. ^ http://findarticles.com/p/articles/mi_hb5037/is_200305/ai_n18263674/
  7. ^ "Germany broke?". CER. Retrieved 2012-09-13.
  8. ^ "Germany's Budget Gap Sets a Bad Example". Businessweek. 2002-11-24. Retrieved 2012-09-13.
  9. ^ "Peer Steinbrueck's Gaping Tax Loophole". German news Web site. 2013-05-01. Retrieved 2013-05-01.
Political offices
Preceded by Minister-President of Hesse
1991 – 1999 		Succeeded by
Preceded by Minister of Finance of Germany
1999 – 2005 		Succeeded by

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