After weeks of political wrangling, Germany's ruling coalition has reached agreement on a draft law to combat tax evasion. The revised draft law is to be presented to Chancellor Angela Merkel's cabinet on Wednesday.
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Finance Minister Peer Steinbrueck (SPD) and Economics Minister Karl-Theodor zu Guttenberg (CSU) have resolved their differences after heated debate over several issues blocked passage of the proposed legislation.
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The law makes it harder to illegally transfer money abroad. Steinbrueck's initial law proposal met with stiff opposition from SPD's conservative coalition partners.
Chancellor Angela Merkel's Christian Democrats (CDU) had cricitised the proposal, saying that it would place all tax payers under suspicion just because they happened to have business ties with foreign countries that were on a blacklist of tax havens.
Lawmakers also expressed concern that the draft law in its current form could violate the country's constitution.
Berlin has waged a campaign to stamp out tax evasion since Klaus Zumwinkel, then chief executive of Deutsche Post and one of Germany's top businessmen, was convicted in a major tax evasion trial.
The German Taxpayers' Association also criticised the fact that individual taxpayers were being scrutinzed by the finance ministry because other countries were not cooperating with Germany's tax authorities.
Around 30 billion euros ($40 billion) are lost to Germany every year due to tax evasion and at least 10 times this amount has so far been illegally transferred abroad from Europe's largest economy, according to calculations by the DSTG tax union.