* German rules out joint euro zone fiscal policy
* German and France to discuss euro at bilateral meet
(Adds details and background)
By Dave Graham
BERLIN, Dec 3 (Reuters) - Germany delivered a firm rebuff on Friday to calls for a joint tax policy in the euro area, saying tougher rules on budget deficit limits would bring Europe closer together as it seeks a way out of debt crisis.
Some European policymakers have argued the bloc's debt problems will only be solved with more centralised coordination of fiscal resources, though Germany is wary of anything that could lead to its taxpayers bailing out other countries.
Chancellor Angela Merkel's spokesman Steffen Seibert told a regular news conference joint fiscal policy was not an option.
"There are no plans and there is no desire for a joint fiscal policy," Seibert told reporters. "A decisive reform of the stability and growth pact already leads to closer cooperation on economic policy."
Germany has led a push to toughen up the stability pact, which is designed to ensure member states' annual deficits do not exceed three percent of gross domestic product (GDP).
Most EU countries' deficits are expected to exceed the three percent cap this year and next, many of them by a sizeable margin. However, Germany now believes it could get its deficit back within the limits next year. [ID:nLDE6B11TJ]
The case of Ireland's low corporate tax illustrated resistance to joint fiscal policy, Seibert said.
Dublin has rejected suggestions from European politicians, including German ones, that it should raise its low corporate tax to reduce its deficit.
The official position of most EU leaders is that deciding on tax levels is a matter for individual governments.
NO TRANSFERS
However, there has been discussion in the euro zone, led by France, on the need for some form of fiscal union or "economic government" in the 16-member euro zone -- an idea Merkel began supporting in early 2010.
Berlin voices strong objections to anything that risks turning the bloc into a "transfer union" where one country -- most likely Germany -- bails out the others. It tends to see policy convergence as a way of encouraging German-style fiscal discipline among its more wayward European partners.
France and Germany hold a regular bilateral summit at the end of next week and Seibert said the euro would be on the agenda when Merkel meets French President Nicolas Sarkozy.
"In every meeting Germany and France hold at the moment, the problems relating to European policy and the euro are always near the top of the agenda, so you can assume that this will be discussed," Seibert said.
However, he denied there were any plans for a special European summit this weekend to discuss the financial crisis.
The German and French leaders upset some of their partners by bilaterally agreeing in the French resort of Deauville in October to propose changes to the EU treaty in order to set up a permanent mechanism for handling future euro-zone crises.
Merkel's subsequent insistence that this should involve making private investors share in the sovereign debt risk from 2013 onwards, when the new mechanism would come into effect, roiled markets ahead of the Irish rescue deal.
The German government has denied any responsibility for pushing up the debt costs of peripheral euro zone countries such as Greece, Ireland and Portugal with this position.
"I reject any direct link that is sometimes made between the political initiatives that Germany and France have made and the development of interest rates on (government bonds)," said Seibert, adding there was no single explanation for the euro's instability.