The practice of funnelling money to tax-free or low-tax countries such as Switzerland in order to avoid paying more punitive taxes at home is finished, the head of French bank Societe Generale said on Tuesday.
Governments and regulators across the world have cracked down on tax evasion in the wake of the financial crisis, a drive which has seen the United States and Europe heap pressure on Switzerland, Liechtenstein, Monaco and others to surrender more information.
"With all the reforms today that have been done by various governments, tax havens - that is to say people with secret bank accounts hidden somewhere to avoid the tax authorities - in my view, that is over," SocGen Chief Executive Frederic Oudea told French television channel BFM.
And as a result he argued that the US inspired demand for automatic information exchange - now being followed up by the OECD is - in his view unnecessary.
That, in my view is utterly ridiculous. First, there is no evidence that money is leaving tax havens. Second, there is no evidence that tax evasion is falling. And automatic information exchange has not even happened yet so we can find out who the perpetrators were and bring them to justice.
SocGen's call is about as appropriate as a convicted murderer saying now you've caught me there's no need for law to punish murder ever again. Which is, of course, nonsense. We have to make sure this crime is stopped for good. And only automatic information exchange will do that.
So let me by cynical: I suspect Soc Gen are not so keen on seeing the back of it. I find any other explanation hard to offer. I wish I could find one - but at the very least they're trying to avoid the costs of this exercise and that is unacceptable. banks have facilitated this abuse for generations. Now they must pay to end it.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
So if the days of tax havens are over, where is all this tax? Can we have it back, please? We don’t need the evaders/avoiders to be punished – well, just a little bit – but if they gave us our tax back, the government could stop punishing the jobless, homeless and poor in this country. Sounds so simple, doesn’t it?
I am increasingly hearing claims that around 75% of the funds held in Switzerland, by far the world’s biggest international banking centre, belong to German, French and Italian residents. This partially explains why so little is being collected from UK residents, whose holding of Swiss accounts seems to have been consistently over-stated.
I am hearing this from Swiss bankers themselves, directly “from the horses’ mouths”. For more evidence look at who the fastest growing banks in Singapore have been in recent years: UBS, Credit Suisse, Julius Baer and Banca della Svizzera Italiana, all carrying for their European clients who wanted their funds shifted out of Europe.
The British do not use Switzerland for the simple reason we do not undertsand their law
we use common law territories
That is and always has been obvious
Richard
It may well have been obvious, but Osborne has a £2.5billion hole in his budget by anticipating a lot more tax to come from the Swiss/UK agreement than was ever going to be the case. His projections for the Crown Dependencies are massively overstated as well.
Anybody with anything to hide will have moved their money well out of the reach of Britain or the EU several years ago.
Switzerland has long been the destination of choice for French residents wishing to evade tax.
I don’t have any figures to hand, but the French authorities seem to be having some (no doubt limited, but apparently not insignificant) success in response to its latest stick & carrot drive to recover some of the lost tax. The stick comes in the form of more severe penalties about to be introduced for any French resident found in possession of an undeclared foreign bank account – at a time when the real possibilities for information exchange (however limited) between the Swiss and French tax authorities are seen to be increasing the chance of being found out. The carrot is the opportunity being offered to those with undeclared accounts to come forward and regularise their situation before the new law comes into force. This is not an amnesty – unpaid tax has to be paid (and presumably with interest), but anyone coming forward now will escape the heavy penalties. According to a recent TV program here, it seems there’s been quite a rush of applicants. It also appears (from investigative journalism) that it has become much more difficult for a French resident to open an account at any of the main Swiss banks, though needless to say there remain ways & means for the unscrupulous.
Of course there will be many others who will continue to take the risk or who have already moved their illicit holdings to other safer havens. The days of tax havens are certainly not over.
I would advise the head of the french bank not to be so quick to say so. You must remember that as long as there is a demand for such a service, albeit a grey area in international tax, creative supply will not be far behind.
The raison d’être of tax havens is money laundering and revenue theft, crimes committed against us all but particularly desperately poor countries home to most of the world’s 1 billion starving people.
The so-called “governments” of these gutters are buoyed by arrogance inherent in the knowledge that the City of London, the world’s leading financial centre, silently sanctions their existence as an indispensable component in lucrative financial fraud.
Every week large corporations and super-rich individuals relocate £billions worth of assets into the care of the tax haven labyrinth to be sheltered by a fanatical concern for opacity before returning into circulation unobserved and apparently untainted by the entire nefarious process.
Places such as the Isle of Man, Jersey and Guernsey Gibraltar, ever sensitive of what others might think have a propaganda budget dedicated to maintaining the appearance of moral purity. A characteristic of dishonesty is a desire to confuse and those engaged in financial fraud are pathologically attached to the status quo of their personalities — outwardly they appear to live lives that are above reproach; but this is an artificial veneer to disguise their duplicity.
The self-righteous hypocrites who sustain tax havens are composed of the same political leaders and captains of industry who control our destinies, and their hedonism and distorted views of conventional morality will never allow them to sacrifice their greed for the welfare of the lower orders. As the debauched Dorian Gray somehow kept his youthful looks the painting gradually revealed his inner ugliness to all.
Mr Murphy,
Automatic exchange will not happen, not because of Switzerland’s opposition, but because the US Congress will not agree to it.
The US government has been trying to offer automatic information regarding some narrow categories of income to the UK and other countries to reciprocate the information it is demanding under FATCA. The House of Representatives,in a rare display of bi-partisan unity, has blocked the necessary legislation of even going to a vote.
In addition, the Federal government does not have a legal basis to compel states such as Delaware to maintain and/or disclose registers of beneficiary owners of companies, which makes it impossible for the US government to exchange information about any income received by non-resident beneficiaries. A bi-partisan initiative led by Sen. Levin and Baucus has introduced a bill in the Senate to change this, but it has nowhere near the 60 votes required to pass the Senate (not to mention the House, of course).
In summary, the country that represents 40% of economic output, dominates the global financial services industry, controls the world’s sole reserve currency and hosts the deepest and most sophisticated capital markets, will not apply automatic exchange of information. This is the unfortunate reality.
But the rest of the world will do it
And that’s what matters to us
The US started it. If they don’t deliver it does not stop the rest of us enjoying the gain
Mr Murphy,
As with everything else, the rest of the world will take its lead from the United States. There is no rationale for Hong Kong, Singapore, Israel, Panama or Switzerland (and many shadier locations) to agree to full automatic exchange if the world’s largest depositary nation for non-residents refuses to do the same.
Even in Europe, Luxembourg and Austria are unlikely to move beyond the limited concessions they have made so far. Luxembourg”s finance minister, Mr. Frieden , has clearly indicated that he would not support amendments to the EU savings tax directive if it was not accompanied by a trully global multilateral agreement on automatic exchange of information.
The US demands
And the US is getting
Mr Murphy,
The US are demanding, and achieveing some success doing so, but that is only because of their dominant size and the of the Dollar in the world’s economy. No other country or group of countries has the same assymetric negotiating leverage.
At the same time, the US are NOT reciprocating. This is automatic exchange in one way only.
I entirely agree
But that will not stop others progressing
Mr Murphy,
Please elaborate then on why in the absence of a gloabl agrement on automatic exchange of information, and in the absence of any credible pressure once the US have cut their own bilateral deals, places like Hong Kong, Singapore, Luxembourg or Panama would agree to broad automatic exchange.
The only only country that has the prower to drive it is the United States but they are doing it for their own narrow benefit only. The rest of the world is, simply, powerless.
The US will demand it
The OCED will follow
And collectively the rest of the world is more important than the US
And they will give to the US
I’ve heard speculation for several weeks now that the entire FATCA plan will soon hit the buffers.
Will the rest of the world do it without the US? I wouldn’t stake my mortgage on it.
There is such a rumour
Created by its opponents
That does not stop others continuing, including the OECD
“The practice of funnelling money to tax-free or low-tax countries such as Switzerland in order to avoid paying more punitive taxes at home is finished…” –
This is like the diversion sign in cartoons! You know the one that the crook with the bag marked swag erects in order to make his escape……
“Governments and regulators across the world have cracked down on tax evasion in the wake of the financial crisis, a drive which has seen the United States and Europe heap pressure on Switzerland, Liechtenstein, Monaco and others to surrender more information”
Now we move on to the pantomime with governments and regulators/United States and Europe portrayed as the “Ugly Sisters”…..you can choose your own Cinderella…
“With all the reforms today that have been done by various governments, tax havens — that is to say people with secret bank accounts hidden somewhere to avoid the tax authorities — in my view, that is over….”
We finish with a film musical…say Mary Poppins when Mr Banks has endured a humiliating sacking from…. err the bank…..someone please give the poor man tuppence to feed the birds!
This truly is laughable, banker’s crocodile tears….
Agreed!