Cash rescue for German cities

Many cities are struggling with debts

The German government has unveiled plans to relieve its cash-strapped cities by giving more money to local authorities.

Finance Minister Hans Eichel has said that changes to local business tax will boost city coffers by 4.5bn euros (£3.2bn) next year and by 5bn euros the year after.

Many cities have been left struggling to keep public services operating after weaker company profits resulted in less tax revenue.

The extra money will be generated by making self-employed professionals such as doctors and attorneys pay a local business tax.

There will also be a crackdown on tax loopholes for large businesses and income from companies' rent and leasing agreements may also rise.

The proposed changes in taxation still need approval from the opposition party, the conservative Christian Democrats.

Leading conservatives have already criticised the plans, saying it will increase the tax burden on businesses who are already struggling to cope with the stagnated economy.

German politicians are already divided over a wide reaching programme of tax cuts that aim to spur the economy but risk a ballooning budget deficit.