By John O'Donnell
BRUSSELS (Reuters) - The European Commission proposed to expand the kind of customer information that banks must surrender to authorities around the European Union, as political momentum grows to clamp down on tax dodging.
Algirdas Semeta, the EU official in charge of tax policy, outlined proposals on Wednesday for banks to disclose account balances, dividends and capital gains, to catch sophisticated schemes not covered by the simpler EU rules now in place.
But the Commission's suggestion will likely face opposition from Luxembourg, which does not want to be forced to lift its veil of banking secrecy higher than that of neighboring Switzerland, its chief rival as a financial center.
"Member states will be better equipped to assess and collect the taxes they are due," Semeta said. "It will be another powerful weapon in our arsenal to lead a strong attack against tax evasion."
Banking secrecy is high on the political agenda ahead of German elections later this year and following the resignation of a French budget minister over a secret Swiss account.
Luxembourg has signed up to exchanging information about the bank accounts of EU citizens from 2015, but its officials have been rowing back in private on the type of data they are willing to hand over.
Luxembourg does not want to agree to a revised version of the EU savings tax regime that would extend beyond simple interest payments on saving accounts, which are little used to hide income, to include foundations and trusts.
The tiny but wealthy state has an important banking sector and a lot to lose, particularly if customers were lured away by a Swiss financial sector subject to laxer rules.
Switzerland is the world's biggest home for offshore assets, totaling $2 trillion and four times the size of those held in Luxembourg.
Luxembourg is awaiting the outcome of talks between Brussels and Switzerland on a similar agreement to swap information. Semeta will kick-start those talks next week on a trip to meet Swiss Finance Minister Eveline Widmer-Schlumpf.
(Reporting By John O'Donnell; editing by Rex Merrifield)