Gerhard Schroder Ready To 'Do A Deal' With Tax Cheats

by Philip Morton, Investors Offshore.com

13 August 2002

In a move which some have dismissed as electioneering in the run up to the September 22 general elections, German Chancellor Gerhard Schroder has revealed that he may offer an amnesty to Germans who have stashed assets offshore without declaring them in order to avoid taxes - if the delinquent taxpayers agree to invest the money in projects in East Germany in order to increase employment in the region.

As a result of rising unemployment, the Social Democrat-Green coalition government is trailing rival Christian Democrats in the opinion polls, and many political commentators believe that the people have now lost all faith in the promises made by the ruling parties. However, the government clearly hopes that swift implementation of the Hartz proposals on job reform - unveiled at the weekend - will persuade them otherwise.

Speaking to Der Spiegel magazine this week, the German Chancellor explained that he would not consider the imposition of heavy penalties, as this would discourage tax evaders from repatriating their hidden assets:

'You should not talk about penalties because this would be counterproductive. To me it is important that the money flows back on clearly defined conditions and is available for certain investments in the German east but not only there.'

However, he added that: 'It is also important to signal to the law-abiding taxpayer that sticking to the law is normal,' perhaps in response to Finance Minister, Hans Eichel's earlier rejection of the tax amnesty plan as a 'slap in the face for honest taxpayers'.

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