19 August 2013

German SPD ties itself in knots over tax pledge

Germany's opposition Social Democrats (SPD) scrambled 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 Steinbrück, 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. 

In an interview with Bild, Gabriel said that Germany lost an estimated €160 billion 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. Steinbrück 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 per cent of Germans will be affected by the SPD's plans to raise the top income tax rate from 42 per cent to 49 per cent for individuals earning over €100,000 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 per cent, its lowest level in months. It also showed Merkel with enough support to continue her centre-right coalition after the September 22 election.

Reuters article

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