Those who support tax havens often argue that they are centres for freedom., They're not, of course: they are centres of deceit, opacity and, for many, ruin. As the FT reports this morning:
France's former budget minister has admitted to lying repeatedly when he denied holding a secret Swiss bank account, dealing a blow to the reputation of President François Hollande's government.
Vehemently protesting his innocence, Jérôme Cahuzac resigned two weeks ago when prosecutors opened an inquiry into alleged tax fraud following reports on the investigative website Mediapart that he had maintained the account for years, before moving it to Singapore in 2010.
Mr Hollandehad given Mr Cahuzac his full backing.
But on Tuesday, Mr Cahuzac said in a statement he had met the judges overseeing the case at his own request. “I confirmed to them the existence of the account,” he wrote, adding he had held it for 20 years and it contained €600,000. “I was caught in a spiral of lies and I went astray. I am devastated with remorse.”
He apologised to Mr Hollande and the government “for the damage I have caused them”. The president quickly issued a statement admonishing Mr Cahuzac for “an unpardonable moral mistake”.
Deceit, assisted by opacity, leading to ruin.
That's the tax haven world.
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You completely miss the point. It is not illegal to have a bank account anywhere in the world, nor is it immoral. Just look at Cyprus. If you were Cypriot you would feel very pleased with yourself for having the sense to keep your money elsewhere so that the legal government (at the behest of European governments) could not (illegally?) steal some of it. Maybe you are even taking a view by holding your funds in another currency – who wants the Euro for example?
No, the point is that this laothsome individual chose to lie about it. He made a conscious decision to defraud his own government out of the tax he was due to pay. He put himself above the people he represented and placed the burden of raising government revenues on others. He was not prepared to do his fair share. THAT is the problem.
Your anger should be directed, as mine is, at the despicable public servant. Nobody wants to discover that they have assisted such people, which is why banks have to satisfy themselves that the source of funds is legitimate. The question is asked but there is little which can be done when the client is a bare faced liar.
He was not a public servant
He was an elected politician
And the issue was solely about tax haven abuse
Martyn, would your reaction be so extreme, if instead of being an elected politician, he had been a business man, a “wealth/job creator”?
I think that you are missing the point. This man would not have been able to commit this fraud without the help of the Swiss banking system, which, as Richard and others have documented has aided wealthy fraudsters, (including many who obtained their wealth by criminal means)to hide their money away from governments.
That is the point about tax havens, of which Cyprus is, or was, one.
In what way is an elected politician not a public servant?
That the account was in Switzerland is neither here, nor there. What this story is about is his failure to own up to it
I am differentiating from a cvil servant
And rightly so
And your dismissal of the point is spurious. The whole point of Swiss banking secrecy was that accounts fid not need to be confessed. There was no other reason for it
“the accounts did not need to be confessed”:
Well, yes they did! While it is of course perfectly legal for a French resident to hold an account in Switzerland or anywhere else, all accounts held in foreign banks are supposed to be declared to the French tax authorities (along of course with the interest earned on them). Not doing so represents tax fraud.
So this case is indeed about his failure to declare the account, compounded by repeated denials of its existence when challenged. But the fact that the account was in Switzerland is not, as Gutbucket suggests, “neither here nor there” – that could only be true if Mr Cahuzac had declared it from the start and not used it to avoid tax.
As you well know, Swiss banks knowingly helped tax evaders
That is how they can now disclose who they are
What the collapse of Cyprus has demonstrated is that tax havens/secrecy jurisdictions have fake economies. Their bloated financial services sector is out of all proportion and typically deleterious to other sectors of their economies.
An elected official is there to serve the public. Don’t be obtuse! That makes him/her a servant.
And yes, my anger would be the same if he was a “wealth/job creator”. Nobody should be dodging their taxes.
Richard, all banks have secrecy. If I asked your bank how much you have in it would you expect them to tell me? How much do you have Richard? You seem to think I have a right to know after all.
A UK bank tells HMRC exactly how much I earn from them in a year
I cannot object
Nor can you
That is the issue we are addressing, not your straw men
Let’s be quite clear here because I don’t think you understand what you are talking about. There are two issues concerning the funds. Firstly the capital amount. What was the source of that capital? Was it legal? An inheritence maybe? Or illegal? The Swiss and Singapore banks had an obligation to check that. Nobody wants illegal funds because accepting them would mean a jail sentence!
Now as to the income from such funds. I am no expert on the French tax system but I would imagine that the onus is on the tax payer to declare his or her worldwide income. No matter if it is in a “tax haven” or in London. The location of the bank is irrelevant. The problem is the failure to declare. It is that simple, nothing to do with secrecy.
If all the “tax havens” ceased to exist, tax evaders would simply stuff money under the mattress or convert it to physical goods. Or employ accountants to come up with clever schemes which enables them to pay zero tax.
Please do not tell me no bank wants illicit funds
We know a) they don’t check (not Citi, recently and HSBC not long ago) and b) no one goes to jail for not checking and c) banks deliberately seek to prevent disclosure
Now why would they do that?
As for your last claims – utter nonsense
Please do not treat us to this rubbish – we can see straight through it – we’ve heard it all before and it’s always utter nonsense
Martyn
I don’t disagree that Cahuzac’s decision not to disclose his income was fraudulent and is an important part of the issue. And clearly it is not illegal for him to have funds in a Swiss bank.
But what you seem to fail to acknowledge is that the Swiss banking system’s secrecy and refusal to co-operate with tax authorities aided him in his deceit. It is latter point that Richard objects too. And so should we all.
Verth,
Well said. That is indeed the point at issue here. Secrecy jurisdictions aid and abet tax evasion, and they do so knowingly because it suits them. Any suggestion to the contrary is, as Richard says, bunkum.
I would just reiterate that in France (where I live and pay taxes), while it is not illegal to have a Swiss (or any other foreign) bank account, failure to disclose its existence (not only any income from it) is illegal.