Huge shortage of money has persuaded Germany and France to form mutual front and reconsider former quite tolerant attitudes towards hiding the tax payers` money not only in faraway and secretive destinations, such as the Cayman Islands, but also in the neighbouring banks.
However, the first reassessment impulse has arrived across the Atlantic when the United States have required one of the most renowned Swiss banks, the UBS (United Bank of Switzerland), to give data on the American citizens suspected for alleged tax evasion of some 18 billion dollars.
When the UBS has handed over to the USA all the data for some 300 American clients and paid the American authorities the fine of 620 million euros for helping tax evading, many have said with disbelief that that very act equalled the death of the Swiss banks and their image of untouchable guardians of money secrets.
Request for additional data on 52,000 bank accounts more the UBS has rejected. This, however, has not diminished the anxiety of some 2,000 billion American dollar owners whose money is kept in the Swiss banks` accounts. According to some estimates, between 50 to 70 percent of that amount is of the dubious origin. This situation could certainly entail sudden withdrawal of savings that could have tremendous impact on standard of living of the Swiss citizens since even 15 percent of this country`s GDP is being realised in the financial sector.
This state in the centre of Europe is also specific after one law finesse. Only in Switzerland does exist difference between "tax evasion" and "tax fraud" which directly has an impact on the Swiss authorities` mandates in helping judicial organs of other countries since the Swiss laws allow legal help only if fraud is in question.
However, only after the Organisation for Economic Co-operation and Development (OECD) pressures did the Swiss government decide to cease the tradition and start cooperation in fighting against tax evading international cases.
According to the Swiss President and Finance Minister Hans-Rudolf Merz, Switzerland will adopt standards that have been set up by the OECD in 2000 for the countries co-operating in the fight against "tax havens." This European country has been refusing this out of fear that it could have made an issue out of the bank secrecy regulations. However, with this action it has been trying to avoid being put on the "black list" whose forming has been announced for the April G20 summit in London.
The same reasons have made Belgium, Lichtenstein and Andorra announce regulations on bank accounts protection softening. The authorities of Lichtenstein, whose banks have been marked a couple of months ago as the ones covering millions that had been embezzled by the German tax payers, have announced their intention of fundamentally revising regulations on bank accounts data protection.
The head of the Government of Andorra Albert Pintat has promised that by November the draft of a law on abolishing bank accounts protection will be adopted within the bilateral agreements on the information on tax issues exchange. Similar regulation application in relation with other EU members has also announced the Belgian Finance Minister Didier Reynders.
"I hope we would not be put on any list of tax havens," said the Belgian Minister and announced the new regulation would be also applied with other countries, before all with the USA.
However, Austria will not give up its regulations on the bank secrecy. Nevertheless, Austrian Finance Minister Josef Prel has announced his country would do more within the information exchange with other countries regarding clients suspected for tax evading.
Similar reservations were also noticed in Luxembourg, especially when even tougher regulations within the Union have been proposed.
When the European Commission has proposed no EU member could hide behind the bank secrecy and every country would have to make available all the account data of the suspicion client, Luxembourg has unofficially announced it would veto such a decision.
According to the Luxembourg Minister for the Treasury and the Budget Luc Frieden, the OECD regulations on the data exchange from case to case should be the only principles that should be applied in the EU. On the other hand, the spokesperson of the European Commissioner for Tax Policy has said all the efforts made in acquiring transparency and data exchange would be welcomed as well as those that would help their suggestions to be accepted.
However, the pressure of big economic powers has not ended with Europe. In this regard, Singapore, Hong Kong, the Isle of Mann and the Cayman Islands have announced greater transparency and wider information exchange in relation to taxes.
British humanitarian organisation "Oxfam" research results testify that insisting on better collectibility and tax evasion prevention has not been set in motion accidentally amidst the financial crisis. Namely, the research has shown that the yearly tax income loss in developing countries is bigger than the foreign aid. Countries` yearly losses that citizens put in cash in offshore tax oases are estimated at even 124 billion dollars that is more than the foreign aid of 103 billion dollars they receive every year.
Secrets in Swiss banks that have not been disturbed even by wars are experiencing the end owing to destructive effects of the global financial crisis. For the time being there have not been numerous claims for cash withdrawal from the Swiss banks` accounts. Anyway, if that after all happens, Switzerland could be the victim of the world crisis, like Iceland or Latvia.
* Nenad Radicevic is a foreign affairs journalist with Politika daily. (Photo: European Communities, 2009) CEV Magazine is an online publication of the Centre for European Values.
