Germany’s Bundesrat, the country’s upper house has thrown out a deal with Switzerland to tax assets stashed by Germans in Swiss bank accounts.
It is seen as a blow to Chancellor Angela Merkel who had hoped the agreement would be in place by 2013.
It was rejected by states run by the opposition Greens and Social Democrats despite an appeal by German Finance Minister Wolfgang Schaeuble.
“That is why I say this to you: you will not find a better solution for the past because you cannot assume that Switzerland will lift its assurances of banking confidentiality retrospectively,” he said to the Bundesrat.
The deal would have required Swiss banks to levy a punitive charge on funds without the identities of the account holders being revealed. Switzerland has already ratified the agreement.
“Switzerland will certainly stick to its position that only taxed assets will be governed in Switzerland and on the other hand, we are always in close contact with our neighbours if it comes to sorting out existing problems,” said Tim Guldiman the Swiss Ambassador
Some commentators believe the SPD will trumpet their rejection of the agreement in the election campaign to paint Merkel as soft on financial wrongdoing by the wealthy.
It’s reckoned 120 billion euros in undeclared funds are in Swiss bank accounts.