Germany's SPD demands tax on rich despite Merkel veto

BERLIN Sat Nov 9, 2013 9:13am EST

The head of the Social Democratic Party (SPD) Siegmar Gabriel (3rd L) and leading SPD party members attend coalition talks with the Christian Democratic Union (CDU) in Berlin, November 5, 2013. REUTERS/Thomas Peter

The head of the Social Democratic Party (SPD) Siegmar Gabriel (3rd L) and leading SPD party members attend coalition talks with the Christian Democratic Union (CDU) in Berlin, November 5, 2013.

Credit: Reuters/Thomas Peter

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BERLIN (Reuters) - Germany's center-left Social Democrats hope to reach a deal to raise taxes on the rich even though Chancellor Angela Merkel's conservatives are opposed, an SPD leader said on Saturday.

Merkel's conservatives emerged from the September 22 election as the largest force but need a coalition partner. The SPD was at first reluctant to join Merkel in a reprise of the "grand coalition" that ruled from 2005-09 but coalition talks are now underway.

Andrea Nahles, deputy SPD leader and a likely minister in a new government, renewed the demand from the SPD's left wing even after chairman Sigmar Gabriel said it was no longer essential to raise taxes as the SPD had pledged in its election campaign.

"A moderate tax increase for those few with very high incomes or great wealth would be an important contribution to improving the lives of many people," Nahles told Spiegel Online. "We'd be able to use that for important investments."

The Christian Democrats (CDU), their Bavarian sister party the Christian Social Union (CSU) and the SPD are in month-long coalition talks. The CDU/CSU are opposed to any tax increases.

The two camps have agreed on some issues but if all the plans were enacted, the federal government would need about 50 billion euros per year in added revenues. Merkel has told both sides to rework proposals and cut costs. She hopes to have a government sworn in by Christmas.

Some SPD leaders had dropped demands for tax increases if additional spending on infrastructure and education could be paid for without tax hikes.

"The question of a tax increase is still on the agenda for the SPD," Nahles said. "We've got a lot of pent-up demand in many areas: education, infrastructure and labor."

The SPD's 472,000 members will be asked to vote on the coalition agreement and could in theory veto it. Many SPD members were initially opposed to another grand coalition, fearful their support could erode further as it did in 2005-09.

"We're not going to agree to any tax increases," said Volker Bouffier, a leader in the CDU's right wing and state premier of Hesse. "That's the core of our economic philosophy."

Gabriel told the Hannoversche Allgemeine Zeitung newspaper: "If we can't agree with the CDU/CSU on a more just tax system, and that appears to be the case at the moment, there are at least other areas where we can make a difference: minimum wage, pay equality and dual citizenship."

The SPD has listed 10 demands it called "non-negotiable", including a minimum wage of 8.50 euros per hour, equal pay for men and women, greater investment in infrastructure and education, and a common strategy to boost euro zone growth.

(Reporting By Erik Kirschbaum; Editing by Janet Lawrence)

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