Legislation slammed

Steinbrueck said Germany loses an estimated 100 billion euros each year, due to Germans hiding their earnings in tax havens such as Switzerland, Liechtenstein, Austria and Luxembourg. He said the government would have greater maneuverability in granting tax cuts if evasion was minimized.

"Tax evasion is not a gentleman's offense," he said when presenting the bill.

The government wants to press ahead with legislation that would put pressure on tax havens to cooperate with Germany on inquiries related to tax evasion by German citizens.

The Green party's top candidate for September's Bundestag elections, Juergen Trittin, however, has expressed doubts over the law's effectiveness.

He also criticized Switzerland, saying the practices of some banks there amounted to "receiving stolen goods."

Steinbrueck's failed "joke"

Steinbrueck's moves in parliament come after days of more controversy on the topic of tax havens.

Earlier this week, Steinbrueck said he would push for transparency on bank secrecy and hoped to discuss it with European neighbours that had not attended a conference on tax havens in Paris last October.

"They (Luxembourg, Liechtenstein, Switzerland and Austria) were invited but they didn't come. I will obviously invite them to the follow-up conference in June in Berlin: Luxembourg, Liechtenstein, Switzerland, Austria, Ouagadougou," he said, adding the capital of Burkina Faso as an apparent joke.

But Luxembourg has not seen the humorous side of the comment.

"The chamber ... condemns without reservation the misuse of language of minister Peer Steinbrueck and the lack of consideration for ... Burkina Faso," the deputies said in a resolution to be sent to the speaker of Germany's lower house.

Meanwhile, Luxembourg's Prime Minister Jean-Claude Juncker, said on German television he would not accept the way in which Steinbrueck had talked about his country and that Europe would only function if "big and small worked together."

Luxembourg has been battling accusations that its banking secrecy rules make it easier for foreigners to evade taxes.

Along with Switzerland, it pledged recently to adhere to standards drawn up by the Organisation for Economic Cooperation and Development aimed at cracking down on countries that do not fully cooperate in cross-border tax evasion cases.