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German SPD Plans to Block Swiss Tax Accord in Upper House

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Sept. 23 (Bloomberg) -- Germany’s opposition Social Democrats plan to block the government’s agreement with Switzerland to end a dispute over tax evasion, calling the accord a giveaway to wealthy Germans breaking the law.

Social Democratic Party Chairman Sigmar Gabriel told the Bild newspaper that the SPD plans to stop the legislation in Germany’s upper house of parliament, or Bundesrat. The party would be able to carry out its threat, since Chancellor Angela Merkel’s coalition lacks a majority in the chamber.

“The message of this agreement is: whoever is rich can buy themselves free from punishment,” Gabriel told the newspaper. “The government is making common cause with lawbreakers and destroying people’s sense of justice.” The comments were confirmed by an SPD official who declined to be identified.

The threat could capsize an agreement hammered out to find compromise on an issue that’s burdened relations between Germany and Switzerland by introducing a levy on German bank customers while preserving Swiss banking secrecy. German Finance Minister Wolfgang Schaeuble and his Swiss counterpart, Eveline Widmer-Schlumpf, signed the accord in Berlin two days ago.

The agreement foresees a 2 billion Swiss-franc ($2.2 billion) upfront payment to the German government from banks to cover the failure by their clients to declare their holdings, an amount that will later be reimbursed from taxes paid by German customers. If the treaty is ratified, it would bring to a halt investigations aimed at wealthy German tax dodgers.

“We are convinced that this agreement solves in a good manner a problem that for years was able now and again to burden relations between the Swiss confederation and Germany,” Schaeuble told reporters at the signing ceremony Sept. 21. “It’s a good and fair result of the negotiations.”

To contact the reporter on this story: Patrick Donahue in Berlin at at pdonahue1@bloomberg.net.

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