Merkel says Germany can cope with refugees without raising taxes

Germany can cope with a record-breaking influx of refugees and migrants this year without raising taxes and without jeopardising its goal of a balanced budget, Chancellor Angela Merkel said in a newspaper interview published on Saturday.

With relatively liberal asylum laws and generous benefits, Germany is the EU's biggest recipient of people fleeing war in the Middle East and economic migrants from southeastern Europe.

A record 104,460 asylum seekers entered Europe's biggest economy in August, and the country expects about 800,000 refugees and migrants this year - four times last year's level.

In light of the influx, the government plans to introduce a supplementary budget to free up funds for the refugees and to help towns in the frontline, which are already struggling to pay for accommodation and fund medical care for the new arrivals.

"We won't raise taxes. And we still have the goal of posting a balanced budget without taking on new debt," Merkel told several local newspapers in an interview.

Berlin's comfortable budgetary position is making it easier to master such "unexpected tasks", Merkel said, adding that the refugee crisis was the government's priority now.

Thanks to higher than expected tax revenues and windfall gains from the sale of mobile phone frequencies, the German government could have leeway for extra public spending of up to five billion euros this year, officials have said.

Merkel's coalition is expected to agree on a series of measures on Sunday, including cutting red tape to facilitate the construction of new asylum shelters, speeding up asylum procedures and increasing funds for federal states and towns.

Turning to the European level, Merkel repeated her call that the refugees should be distributed more equally across the European Union member states, as part of a common strategy to cope with Europe's unprecedented migration crisis.

"The whole system needs to be redesigned," Merkel said, adding that tasks and burdens should be distributed more fairly.