BERLIN, Dec 31 (Reuters) - Chancellor Angela Merkel hinted at possible tax relief before the September election for the first time on Wednesday, edging away from her previous resistance to any immediate reductions to boost economic growth.
Merkel, facing criticism for opposing tax cuts from inside her Christian Democrats (CDU) and from the Bavarian sister party Christian Social Union (CSU), said in a speech to be delivered on Wednesday the government would look into possible tax relief.
"Wherever it is responsible -- with regards to future generations -- we'll try to relieve all those who pay taxes and other levies," Merkel said, according to a text of her New Year's address on German television.
But she did not offer a time frame or any further details.
Merkel had until now ruled out any tax cuts until after the September federal election, where she is seeking a second term. The CSU has, however, threatened to block any further economic stimulus measures if tax cuts are not included in the package.
Merkel has said balancing the federal budget will remain a top priority for her government.
Germany has slipped into recession and economists have predicted it could be the country's worst post-war downturn.
Merkel had also at first resisted a second stimulus package after the government passed an initial set of measures in December it said was worth 31 billion euros
But in a series of small steps she gradually shifted her position and is now backing a new package of investment spending that she said will be agreed by mid-January. German media reports price the new deal at 25 billion euros.
In her speech, Merkel also announced she plans to hold regular meetings with political, industry and union leaders to explore ways to combat the economic downturn. She held a first such meeting in the chancellery on Dec. 14.
Separately, a Merkel ally criticised the CSU for demanding conditions for their backing of the stimulus package. Saarland state premier Peter Mueller said they were counter-productive.
"It's not helping us reach the target by with such conditions," Mueller told the Hamburger Abendblatt daily. "What's important is that we give the economy meaningful support with good financial reasoning. If those boxes are checked, every responsible political leader must support the stimulus package."
(Writing by Erik Kirschbaum; Editing by Andy Bruce)