Austrian conservatives rebel over tax reform plans

VIENNA (Reuters) - A group of conservative Austrian lawmakers has broken with the party leadership over reform plans that would give the taxman more power to snoop into the accounts of suspected cheats, a sensitive topic in a country enamoured of banking secrecy.

Resistance from rebel People's Party (OVP) MPs from Styria province may complicate efforts to adopt a 5 billion euro (3.5 billion pounds) tax relief package that also needs the support of the opposition Greens party because it amends the constitution.

The governing Social Democrats (SPO) and junior partner OVP agreed in March after months of talks to cut income tax rates for nearly all except those earning more than 1 million euros a year as a way to boost the stalled economy.

The plan calls for raising nearly 2 billion euros in revenue by fighting tax fraud -- in part by requiring shops to enter all transactions into cash registers and give receipts -- and raises VAT rates on some items.

The Styrians were upset by provisions that dilute banking secrecy by giving more powers to tax inspectors, who could look into bank accounts without getting court approval as now.

"This is such a sensitive intervention in everyone's basic rights and privacy that you cannot do this without a judge's order, in my view," MP Werner Amon told ORF radio.

"It really upsets a lot of entrepreneurs but also others that a general suspicion within the context of a tax review can lead to opening bank accounts."

The OVP rebels deny their revolt has anything to do with the Styrian provincial election next weekend.

National OVP leader Reinhold Mitterlehner said the Styrians had raised "absolutely fair and factual objections" that he was sure could be cleared up in the legislation's final form. But the Greens said talks with the government on the tax package were on hold until the OVP got its act together.

Should the Greens go along, the SPO and OVP would have 123 votes in parliament, one more than needed for a two-thirds majority required to amend the constitution. The six Styrian rebels could thus scupper the deal.

When Austria agreed to share information with other EU members about citizens' foreign bank accounts, politicians took pains to assure the public that Austrians' domestic bank records would stay safe from prying eyes. But the current crackdown on fraud has changed the equation and sparked a popular outcry.

(Editing by Mark Heinrich)