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Luxembourg urges Germany to cool rhetoric in tax row

  Luxembourg urged Germany on Thursday to tone down its rhetoric in a row over how best to fight tax evasion.

German Finance Minister Peer Steinbrueck, already under fire in Luxembourg, Austria and Switzerland for repeated calls to crack down on tax havens, caused outrage last week when he compared the Swiss to “Indians” running scared from the cavalry.

“We should come back to a tone that’s not dictated by a country’s size,” Luxembourg’s Treasury and Budget Minister Luc Frieden told reporters at a meeting of European Union leaders in Brussels.

The European partners are trying to agree a position for the Group of 20 summit on April 2, including a call on the G20 countries to fight tax evasion and ensure better cooperation from tax havens.

German Chancellor Angela Merkel said last week she was optimistic tax havens would cooperate if the G20 threatened to blacklist them. But Luxembourg Prime Minister Jean-Claude Juncker told reporters in Brussels he was against any EU country being put on such a blacklist and said such a list was not needed.

Juncker said Berlin should not try to take credit for the announcement by Luxembourg, Switzerland and Austria last week that they were ready to share information on foreign savers on a case-by-case basis.

“I would be grateful if people in Germany wouldn’t pretend that Austria and Luxembourg caved in under German-French pressure,” Juncker said. Austrian Finance Minister Josef Proell said he hoped the “tensions" would disappear. “I expect a fair debate among EU partners,” he said.

Steinbrueck called the row “absurd”, saying he had not specifically referred to Switzerland in his controversial remarks. “Besides, I stick to it: There’s great international agreement on the fact that illegal tax practives have to be fought. And I expect partner countries ... to be helpful so that tax evasion is indeed being banned from this world,” he said.

Germany, Europe’s largest economy, suspects thousands of its citizens are hiding money in offshore accounts in tax havens such as Switzerland and Liechtenstein.

Fanning the debate over the bank secrecy issue, Steinbrueck said in an interview published earlier on Thursday that he had received menacing letters from Switzerland and had been “bad-mouthed as a Nazi stooge.”

Thomas Mueller, a Swiss member of parliament, had compared the minister to a “generation of Germans ... who went through the streets wearing leather coats, boots and (Nazi) arm-bands”. (Reuters)