STOCK MARKET WATCH -- Monday, 26 November 2012

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18. German-Swiss Tax Evasion Deal Blocked in Berlin

http://www.spiegel.de/international/europe/german-opposition-votes-against-tax-treaty-with-switzerland-a-868912.html

It was supposed to end decades of disagreement between Switzerland and Germany over tax evasion, but on Friday lawmakers in Berlin put a stop to it. The country's upper legislative chamber, the Bundesrat, voted against implementing a long-awaited tax treaty that parliament had already approved.

The conflict between the two neighboring countries on the issue now threatens to continue after members of the opposition Social Democratic Party (SPD) and the Green Party used their majority to block the measure in the Bundesrat, which represents the interests of Germany's 16 states. The issue must now be addressed by the Mediation Committee between the upper and lower parliamentary chambers. But any potential agreement would then have to be re-approved by Switzerland.
The tax treaty, which would have retroactively taxed the unclaimed money held by German citizens in Swiss bank accounts, was expected to bring in about €10 billion ($12.9 billion) in tax revenues. Under the agreement, money stashed in Switzerland over the last 10 years would be taxed at a rate of between 21 and 41 percent, and the tax evaders would remain anonymous. Beginning in 2013, they would then be taxed at normal German rates. But the SPD and Greens said the agreement didn't go far enough.

They voted against the measure despite warnings from Chancellor Angela Merkel's party, the conservative Christian Democratic Union (CDU). The party's General Secretary Hermann Gröhe told daily Neue Westfälische ahead of the vote that their "total refusal" on the issue is "irresponsible" and will cost the country's states billion