German SPD ties itself in knots over tax pledge

Reuters News
Posted: Aug 19, 2013 12:17 PM
German SPD ties itself in knots over tax pledge

By Erik Kirschbaum

BERLIN (Reuters) - Germany's opposition Social Democrats (SPD) scrambled on Monday to contain a damaging debate over their tax hike plans as new opinion polls showed the party falling further behind Chancellor Angela Merkel's conservatives before next month's election.

Over the weekend the party's two top leaders, chairman Sigmar Gabriel and chancellor candidate Peer Steinbrueck, appeared to row back on the SPD's campaign demand to raise taxes on the wealthy, saying the hikes could later be reversed if a planned crackdown on tax evaders proved successful.

Allies of Merkel dismissed the comments as a sign of panic in the opposition camp. And SPD leaders struggled to explain their stance, denying on the one hand that they were abandoning a central plank of their election platform, but also making clear they would rather not enact the tax raises they have promised.

"I don't think paying taxes is sexy at all," Gabriel said at a news conference that appeared designed to calm the tax storm. "I'd rather not raise any taxes at all."

In an interview with Bild newspaper, Gabriel added that Germany lost an estimated 160 billion euros each year due to tax evasion.

"We wouldn't have to raise taxes and could even cut them if we could finally put a stop to tax evasion," Gabriel said.

Steinbrueck has tried to make the SPD's tax increase promise appealing to the working class voters who make up the bulk of the party's supporters.

At every campaign speech he stresses that only five percent of Germans will be affected by the SPD's plans to raise the top income tax rate from 42 percent to 49 percent for individuals earning over 100,000 euros per year.

But the message doesn't appear to be resonating with voters. A poll by Emnid on Sunday showed backing for the SPD dipping to 24 percent, its lowest level in months. It also showed Merkel with enough support to continue her center-right coalition after the September 22 election.

In an interview with Reuters on Monday, the leader of the Free Democrats (FDP), junior coalition partners in Merkel's government, dismissed the SPD's tax comments as "sheer panic".

"If Gabriel is now saying the SPD doesn't want to raise taxes, they're practically telling voters now that their election program is a big lie," said Philipp Roesler, who is also economy minister.

(Reporting By Erik Kirschbaum; Editing by Noah Barkin)