The German government on Wednesday flatly rejected calls by an economic think tank to levy an extra wealth tax on rich people and impose forced loans on them in a bid to help ease the tight budget situation.

A spokesman for the Finance Ministry in Berlin, Martin Kotthaus, said the suggestion made could be interesting for one or the other fellow eurozone nation, but not for Germany. He said there was no problem in the country with collecting taxes, nor would he describe current levels of fresh borrowing in Germany as spinning out of control.

Kotthaus emphasized a special tax on the rich was not needed to solve budget issues, adding that everything that needed to be done could be achieved through the conventional channels of fiscal policy.

Bold idea, or just populist?

Earlier on Wednesday, the Berlin-based German Institute for Economic Research (DIW) suggested a one-off tax and mandatory loans from rich people could make a valuable contribution towards speedy budget consolidation.

The think tank's Stefan Bach explained a 10.0-percent tax on individual assets exceeding 250,000 euros ($306,500) could immediately wash some 230 billion euros into state coffers in Germany alone, with 8.0 percent of the population being affected by such a move.

He also said that forced loans could be used introduced in combination with the one-off wealth tax, enabling the rich to see at least some of their money back in a couple of years. Bach argued such a measure would "considerably reduce resistance" on the part of the more affluent in society.

hg/   (Reuters, dpa)