Ex-German finance minister keeps up pressure on Swiss over tax

ZURICH Wed Sep 19, 2012 4:31pm EDT

ZURICH (Reuters) - Former German Finance Minister Peer Steinbrueck said on Wednesday federal states led by his Social Democrats would not waver in their opposition to a deal with Switzerland meant to stop Germans using secret accounts to evade taxes.

Speaking to a Swiss business audience, Steinbrueck alluded to comments he made in 2009 that enraged Switzerland during a global drive to clamp down on tax havens: "I know I am on thin ice but I will still walk on it."

Steinbrueck, one of three senior lawmakers vying to lead the opposition centre-left SPD into the 2013 election against Chancellor Angela Merkel's conservative Christian Democrats, said his party's support for the deal could not be bought.

"You won't catch me with money," he said. "We would lose legitimacy if we don't pursue tax evaders."

Merkel said on Monday she would seek to convince the SPD to back the deal. Swiss media have reported her government might seek to win over German states, some of which are highly indebted, to support the agreement with financial incentives.

Germany, whose citizens hold some 150 billion euros in Swiss accounts, stands to net billions via the accord, and the federal states would cash in on part of that.

Merkel's government approved the deal earlier this year after winning new concessions from Switzerland, but it needs approval from parliament's upper house, or Bundesrat, which represents the states and where the government lacks a majority.

The agreement involves Swiss banks levying a punitive charge on undeclared money held by Germans and taxing future income, with the proceeds passed on to Germany, which would not find out the identities of the account holders.

Steinbrueck said the deal was severely flawed, including because it would retroactively legitimize tax fraud.

He said another reason to oppose the deal was that Germany would get less information on tax evaders than what Switzerland is offering the United States to settle a long-running dispute over Swiss banks accused of helping rich Americans dodge taxes.

Steinbrueck, finance minister in Merkel's grand coalition until late 2009, said Switzerland should not assume the current tax deals under consideration would let its banks off the hook.

"The Americans will continue to exert pressure ... and the French, even the Italians," he said. "If the tax deal fails, we will find ourselves at the table again."

Switzerland has struck similar deals with Britain and Austria and is hoping for accords with Italy and Greece.

Swiss bank UBS said on Wednesday its Paris offices had been searched as part of a probe into alleged aid for tax evasion, in a sign that a months-long investigation into the Swiss bank's French wealth management activities may be gathering steam.

(Reporting by Emma Thomasson; editing by Andrew Roche)