Merkel's conservatives plunge in poll amid tax evasion scandal

BERLIN (REUTERS) - Mrs Angela Merkel's conservatives plunged three points to 39 per cent in a leading opinion poll on Wednesday as a tax evasion scandal embroiled a powerful ally of the German chancellor and the conservative party.

The weekly Forsa opinion poll for Stern magazine and RTL television found the Christian Democrats (CDU) and their Bavarian sister party, the Christian Social Union (CSU), falling an unusually steep three points to their lowest level this year.

The CDU/CSU's coalition partners, the Free Democrats (FDP), were unchanged at five per cent for a total of 44 per cent. The coalition is seeking re-election in September. Movements in the Forsa poll are usually just one or two points in any week.

The centre-left opposition was also unchanged in the Forsa poll at 37 per cent with the Social Democrats (SPD) on 23 per cent and the Greens on 14 per cent. The Left party rose one to eight per cent and fringe parties under five per cent also gained.

Last week one of Germany's most admired sports managers, Bayern Munich president Uli Hoeness, voluntarily reported himself to authorities in a tax evasion investigation that exposed the government to criticism it is lenient on tax cheats.

"It's mainly Hoeness's closeness to the CSU (in Bavaria) that is harming the conservatives overall right now," said Forsa managing director Manfred Guellner. He added that the SPD and Greens were not able to benefit from the tax evasion affair.

The 61-year-old Hoeness said he had alerted tax authorities in January that he held a Swiss bank account. Mrs Merkel, who knows Mr Hoeness personally and has sought his advice on business issues, felt let down by him, her spokesman said.

Mrs Merkel is seeking a third term and the opposition SPD and Greens are trying to paint her as soft on white-collar crimes, especially tax evasion, a major campaign issue. Mrs Merkel is running against SPD candidate Peer Steinbrueck, who led a crackdown on tax havens when he was German finance minister.

Mr Hoeness's revelation has shocked Germans and dominated the media in the run-up to the national election on Sept. 22, and a crucial regional election in the soccer club's home state of Bavaria on Sept. 15. Previously, he had publicly railed against tax evasion, winning applause from soccer fans and taxpayers.

On Monday, the state prosecutor's office in Munich said it was looking into whether Mr Hoeness had disclosed the Swiss account before tax authorities had started their own investigation.

CSU leaders distanced themselves from Mr Hoeness. The SPD and Greens argued that the affair showed that they were right to block a tax amnesty deal with Switzerland in December that was backed by Mrs Merkel and her Finance Minister Wolfgang Schaeuble.

The SPD and Greens vetoed the deal in the upper house of parliament. It would have imposed taxes on assets hidden away by German citizens, but would not have revealed their identities.

Mr Hoeness turned himself in shortly after the Swiss deal died.

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