Berlin  - The leader of Chancellor Angela Merkel's sister party in Bavaria fired a shot across her bows Tuesday as he warned he would not support a new conservative-liberal coalition without a pledge of tax cuts.

Christian Social Union (CSU) chairman Horst Seehofer made the pledge a day after Merkel reacted coolly to a CSU programme calling for cuts in income tax and value-added tax as well as changes in corporate tax rules.

"I will not sign any coalition agreement that does not envisage lower taxes - and the date has to be 2011 or 2012," Seehofer told the newspaper Muenchener Merkur.

The CSU, a regional party which fields candidates in the wealthy southern state of Bavaria, forms a conservative alliance in parliament with Merkel's Christian Democrats
(CDU).

Differences between the two allies surfaced days ahead of Sunday's general election, which Merkel hopes will give a her a majority to form a new coalition with the liberal Free Democrats (FDP) as junior partner.

For the past four years, the chancellor has headed an uneasy "grand coalition" with centre-left Social Democrats (SPD), who favour job creation programmes instead of lower taxes.

Merkel's party has also promised a two-phase reduction in taxes to boost the economy as it slowly emerges from recession, but has avoided setting a specific date for its introduction.

Merkel rejected the CSU's timetable, and also questioned where funds will come from to cover the Bavarian party's plan to slash vat for restaurants, tradesmen and other labour-intensive services.

At the same time, she defended the need to prime the economy. "If we damage the economic revival by excessive saving then we will be doing something wrong," the chancellor said in a radio interview.

The CSU announcement came hours after Economics Minister Karl-Theodor zu Guttenberg warned on national television that Germans would have to tighten their belts next year.

"We will have to make savings; we will have to do without one or another of the things we have grown accustomed to," he said.

Guttenberg, who is one of the CSU's rising stars, was not present when the party's parliamentary chief, Peter Ramsauer, unveiled the new 100-day initiative on Monday.

"That the CSU took it on itself to promise tax cuts smacks of questionable populism by the party and its leader, Horst Seehofer," the newspaper Heilbronner Stimme said.

Finance Minister Peer Steinbrueck had warned in the same television programme as Guttenberg that Germany faced a tough year ahead because of the money spent by the government to dig Germany out of recession.

"If I remain finance minister next year I will be forced to raise the national debt by 100 billion euros, instead of the 6 billion originally planned," he said.

Merkel has run a low-profile election campaign, concentrating on the achievements of the past four years and her success in dealing with the economic crisis.

Current opinion polls show her party and the much smaller Free Democrats hovering around the 50 per cent needed to forge a new coalition after the September 27 vote. dpa