BERLIN (Reuters) - German Finance Minister Wolfgang Schaeuble has dampened hopes of a reform of Germany's income tax bracket system during the present legislature, saying in a newspaper interview there were no plans to tackle it in 2016.
The Social Democrats coalition partners to Chancellor Angela Merkel's conservatives, have asked to scrap the rule that the brackets are not adjusted for inflation.
A German government spokesman said last month that there was no room in the 2014 or 2015 budget to tackle so-called "cold progression" as the priority was budget consolidation, but that comment raised expectations such a move could come in 2016.
"I know of no such plan, and I haven't discussed such a matter with anyone," Schaeuble, a Christian Democrat, told the Neue Osnabruecker Zeitung in an interview published on Saturday.
Unlike major economies such as the United States, Britain and France, thresholds in Germany's progressive tax system are not automatically adjusted - something the Organisation for Economic Cooperation and Development (OECD) has urged it to address via the introduction of index-linked tax brackets.
The German government surprised with a slightly lower tax revenue estimate for 2014 earlier this month, which Schaeuble said left Germany no financial leeway to cut taxes.
A Finance Ministry spokeswoman said on Saturday in response to a newspaper report that Berlin faced a 4 billion euro shortfall, that the government's plans to reach a balanced budget this year and refrain from any new borrowing in 2015 were on track thanks to fiscal discipline.
Germany's right-left coalition of conservatives and Social Democrats has not yet agreed on how to fill the funding gap. Possible economic sanctions against Russia could have an impact on Germany's tax intake.
Schaeuble told the Neue Osnabruecke Zeitung unexpected external events could always leave the targets vulnerable.
(Reporting by Alexandra Hudson and Thorsten Severin; Editing by Alison Williams)