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Germans eye wealth tax to bail out the Pigs

WEALTHY households in troubled countries would face new taxes on property and other assets under German plans to help the struggling eurozone.

Senior advisers to Chancellor Angela Merkel are pushing for better-off households to pay towards the cost of any future bailouts for the weaker members of the single currency.

The proposals, from members of Germany's council of economic experts, raise the prospect of taxes being imposed on property in a country like Spain if its government was forced to seek a bailout.

The council, known as the 'Five Wise Men', is often used to test new policies that are later adopted officially.

The German suggestion is the latest sign that Berlin is intent on imposing even tougher rules on weaker southern euro members in exchange for using its economic might to support their finances.

As well as inflaming tensions between Germany and its smaller southern partners, the suggestion could also mean that those with holiday homes are dragged deeper into the eurozone crisis.

Senior figures in Germany are now arguing that some richer home owners in countries like Ireland, Spain, Portugal and Greece have so far avoided paying their fair share to rescue the euro, leaving Germany paying too much.

Taxes on property or other assets would mark a significant change in Europe's approach to funding bailouts for eurozone members.

Prof Peter Bofinger, an adviser to Mrs Merkel, said that levies on bank accounts are the wrong way of funding bailouts, because rich people are able to shift their money out of the country.

"The resourceful rich just move their money to banks in northern Europe and avoid paying," Prof Bofinger told German magazine 'Der Spiegel'. (© Daily Telegraph, London)

Irish Independent