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Germany's SPD wants to target super rich with wealth tax

BERLIN (Reuters) - Germany’s co-governing Social Democrats (SPD) want to introduce a wealth tax for multimillionaires and billionaires and use the extra revenues to boost public investment in infrastructure, one of its interim leaders said on Monday.

FILE PHOTO: German Vice Chancellor and Finance Minister Olaf Scholz, a member of the co-governing Social Democrats, looks on during an event in Berlin, Germany, August 17, 2019. REUTERS/Annegret Hilse

Thorsten Schaefer-Guembel told reporters that the SPD party executive committee earlier in the day endorsed a working group proposal envisaging a 1% wealth tax on assets such as property, real estate, company shares and cash.

For billionaires, a tax rate of up to 1.5% could apply, Schaefer-Guembel said, adding that a more detailed proposal would be discussed at the SPD party congress in December.

The SPD wants to grant “very high” tax allowances to ensure that only wealthy Germans with assets worth more than 2 million euros are targeted, Schaefer-Guembel added.

Senior members of Chancellor Angela Merkel’s conservative CDU/CSU bloc oppose a wealth tax. They point to the coalition deal with the SPD in which both blocs said they would refrain from raising taxes in the current legislative period until 2021.

The SPD plans forecast annual revenues of up to 10 billion euros ($11.14 billion) and are meant to sharpen the SPD’s profile by returning its focus to issues such as social justice and redistribution, Schaefer-Guembel said.

Private wealth is concentrated in very few hands in Germany. According to the International Monetary Fund (IMF), the richest 1 percent of private households in Germany owns almost a quarter of total net assets.

A poll published on Monday showed that 58% of Germans said they were in favor of introducing such a wealth tax while 33% said they rejected the idea.

The SPD’s standing in opinion polls has plunged since it joined Merkel’s conservatives in government. Supporters complain that the party has lost its working-class credentials and become indistinguishable in many policy areas from the CDU/CSU bloc.

Schaefer-Guembel said SPD leaders were well aware of the problem, adding that Finance Minister Olaf Scholz was backing the plans and that he had contributed his ideas.

SPD members will vote on a new party leadership at a Dec. 6-8 congress in Berlin. Scholz is running on a dual ticket to become co-leader of Germany’s oldest party, and victory would bring him one step closer to his dream of becoming Germany’s next chancellor.

Reporting by Michael Nienaber; Editing by Mark Heinrich