Merkel Seeks End to Corporate Tax Havens in Election Fight

German Chancellor Angela Merkel called for an end to tax loopholes for multinational companies, adopting an election-year theme that complements her efforts to shield taxpayers from the fallout of the financial crisis.

Addressing a rally of her Christian Democratic Union party yesterday near her constituency in northeastern Germany, Merkel took up topics closer to the main opposition Social Democrats by backing fair wages for low-income earners and criticizing “huge speculation” in the U.S. as a trigger of Europe’s debt crisis.

“The world hasn’t learned the lesson the way we would have wished,” Merkel, who is seeking a third term in elections on Sept. 22, said to applause. “You can’t have huge global companies do huge business in Europe, the U.S. and elsewhere, and then pay taxes in some tax paradise. This must end, and I will fight for that.” She said she will lobby other Group of Eight leaders at their annual summit in the U.K. in June.

Merkel fleshed out her campaign rhetoric as voter support for her Christian Democratic bloc matched the highest level since she became chancellor in 2005.

Polls suggest Merkel’s popularity wasn’t dented by losing Education and Research Minister Annette Schavan, who quit on Feb. 9 after her university revoked her doctorate. Johanna Wanka, 61, a mathematician and CDU member who like Merkel hails from eastern Germany, was sworn in as successor today at a ceremony performed by President Joachim Gauck.

‘Profit Shifting’

Merkel’s push for debt reduction, budget austerity and fixing state finances at home and throughout the 17-nation euro area has led her party to focus on differences in corporate tax regimes that she views as depriving governments of revenue.

Such “profit shifting” is “a serious risk to tax revenues, tax sovereignty and tax fairness” to the detriment of smaller companies, the Paris-based Organization for Economic Cooperation and Development said in a report dated Feb. 12.

Merkel’s speech, delivered at a sports complex in the town of Demmin in Mecklenburg-Western Pomerania, was part of Ash Wednesday rallies by German parties that included attacks on the chancellor’s record by Peer Steinbrueck, the Social Democratic challenger who was her first-term finance minister.

While Merkel is Germany’s most popular politician, her Christian Democrats may need to change coalition partners even if they win the most votes in September, as polls suggest.

Poll Record

The Christian Democrats rose two percentage points to 43 percent in the Forsa poll released yesterday, equaling the all- time high of her chancellorship reached four weeks ago. The Free Democrats, Merkel’s junior coalition ally, declined one point to 3 percent, below the 5 percent threshold to win seats in parliament. The Social Democrats, the biggest opposition party, were unchanged at 25 percent, with their traditional Green Party allies declining a point to 14 percent.

The Feb. 4-8 poll of 2,505 eligible voters for Stern magazine and broadcaster RTL has a margin of error of as many as 2.5 percentage points.

Schavan, a CDU member who held the education post since Merkel came to power, was stripped of her doctorate by Heinrich Heine University in Dusseldorf on Feb. 5 after faculty leaders concluded she “systematically” copied parts of her 1980 doctoral thesis in philosophy. Schavan said she will challenge the decision.

To contact the reporter on this story: Tony Czuczka in Berlin at aczuczka@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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