The center-left party leader Gabriel told German public radio on Sunday that prosecutors in Germany should pay closer attention to Swiss banks and their customers in Germany.

"We are talking about organized crime in Swiss banks in Germany," Gabriel said, advocating a specialist public prosecutors office in Frankfurt targeting the use of tax havens. He pointed to the US threat to prosecute Swedish banks that help Americans funnel funds abroad. "Why don't we have the confidence to do that? Or why don't we pass the responsibility on to the attorney general, who could investigate the matter? They [Swiss banks] would stop in a matter of moments, of that I am certain."

Gabriel says the threat of lawsuits would stop tax evasion

Gabriel's Social Democrat (SPD) party opposes a new bilateral deal with Switzerland that would seek to stop the practice, saying that the current proposal contains too many loopholes and might end up legalizing tax evasion.

Hans Michelbach from the Bavarian arm of Chancellor Merkel's Christian Democrats said Gabriel and the SPD were conducting an "ideologically motivated private war against Switzerland."

The state of North Rhine-Westphalia, governed by the Social Democrats and Greens, recently purchased a CD containing data of Germans depositing their money in Switzerland - a move Gabriel also defended in the interview.

Upping the stakes, or slowing progress?

The chairman of Merkel's junior coalition partners, Rainer Brüderle of the Free Democrats, told the Sunday edition of the Rheinische Post newspaper that such actions weren't helping the talks with Switzerland.

Coalition leaders are looking for a bilateral tax deal with Berne

"Tax evasion is no trivial offense, but a government purchasing stolen data isn't clean either," Brüderle said, adding that it was "hypocritical to play the tax sheriff and simultaneously use a parliamentary blockade to prevent the fight against tax evasion."

The ratification of the government's desired tax deal with Switzerland has been forced onto the back burner due to the opposition to the deal in states governed by the opposition parties.

The government says the deal, which was meant to be introduced at the start of 2013, would apply similar taxation levels to those in Germany for funds deposited in Switzerland, while also imposing a one-time fee on funds deposited before the deal came into force. Gabriel said on Sunday that his party opposed the move because it "legalizes tax evasion and grants tax dodgers so much time to send their money elsewhere, that it is ultimately ineffective."

msh/ng (dapd, dpa, Reuters)