Merkel Denied as German Opposition Stalls Swiss Tax Treaty

German opposition parties blocked a treaty to combat tax dodging in Switzerland, stalling Chancellor Angela Merkel’s agenda in an election year.

The vote in the upper house of parliament in Berlin today extended the legislative deadlock over the project, which the Swiss Bankers’ Association has already declared dead. The Social Democrat-led opposition holds a majority in the chamber after a series of state election losses by Merkel’s governing coalition starting in 2010.

Merkel is seeking a third term in federal parliamentary elections probably being held Sept. 22. Peer Steinbrueck, her first-term finance minister and Social Democratic challenger this year, has called for renegotiating the treaty.

The draft agreement imposes a withholding tax on Swiss accounts held by Germans and would help end German authorities’ practice of using stolen Swiss bank data to find tax evaders.

Merkel’s coalition majority in the lower house, or Bundestag, rejected changes in the pact in a vote last month. That sent the proposal back to the upper house, an assembly of Germany’s 16 state governments, which previously stopped the bill in November.

Germany earmarked 499 million euros ($681 million) in revenue from the tax accord for the 2013 federal budget, according to Finance Ministry spokeswoman Silke Bruns.

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