A long-debated deal for dealing with German tax evaders with Swiss bank accounts has cleared the German cabinet, but getting the law past both houses of parliament may be a tall order.
The German cabinet has approved a proposed bill that would see German tax evaders in Switzerland pay up. According to the proposal, income earned illegally in Switzerland by Germans would be taxed at a rate of 21 to 41 percent, with the money going to German government coffers. The tax evaders would remain anonymous.
The law would come into effect on January 1, 2013, and would also see future capital gains taxed at a similar rate to those in Germany.
The German Finance Ministry defended its decision on Wednesday when it was heavily criticised by opposition parties.
"This is more than all Finance Ministers from the Social Democrats regarding tax evaders have ever accomplished," said the finance ministry's parliamentary undersecretary Steffen Kampeter, a member of the Christian Democrats, on Wednesday ahead of the cabinet session on tax evasion. "This agreement will ensure that Germans in Switzerland will be taxed as highly as they would be in Germany."
He added that in addition to the money flowing back to Germany, there would be new information that would act as a deterrent - such as cash flows of German tax evasion from Switzerland into other countries.
The opposition is determined to get the last word on the proposed law, saying they plan on using the state-controlled upper house of parliament, the Bundesrat, to block the measure. The Bundesrat does not share the same majority of Christian Democrat and Free Democrat politicians that the cabinet and lower house, or Bundestag, has.
"This agreement remains a gift for German tax evaders, who remain in the shadows," said the opposition Social Democrats fraction deputy Joachim Poss.
He said that the new law was a further example of a "finance policy without principle" that benefitted millionaires.
Finance Minister Wolfgang Schäuble estimates that 10 billion euros ($13.1 billion) could come from the one-off collection of tax income. It is estimated that between 130 and 150 billion euros are illegally being held in Swiss bank accounts.
mz/jm (AFP, dpa)