I have got reports that German Finance Ministry spokesman Torsten Albig has said of the Liechtenstein tax evasion scandal sweeping Germany:
It is all about criminality ... the problem is not the possibilities presented by Liechtenstein, the problem is the criminal energies of German tax evaders.
Of course he's right to say that German tax evaders need to be tackled. They are the demand side of corruption.
He's absolutely wrong to say that the problem is not the possibilities presented by Liechtenstein. Liechtenstein and the professional firms and banks who operate there are the supply side of the corruption equation. One cannot exist without the other. The problem cannot be addressed unless both are tackled.
In truth what Albig has said is a shocking statement, and it goes to the core of what the Tax Justice Network (TJN) is concerned about. It has exact parallels with the argument TJN has been making about corruption (and TJN would consider tax evasion as a form of corruption). Corruption/tax evasion have a demand side (the kleptocrats, the tax evaders) and a supply side (not just the bribe-giver, as people have hitherto interpreted the supply side, but the international infrastructure that facilitates and promotes the cross-border flow of dirty money).
What Albig is saying, on this reading, "we care about the demand side, but not the supply side."
Germany is calling for a European wide approach to tackling tax evasion. One of the first things it will have to embrace is the understanding that the supply side has to be tackled if any initiative is to work.
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It begs the question that if the German Secret Services are so tied up fighting tax evasion and using thier meagre budgets in so doing, then who is out there fighting terrorism and other pressing crimes?
Until Europe comes up with a single and coherent EU wide tax strategy and legislation then there will always be those who feel justified to go elsewhere because they can get a full range of financial services that are not easily available in thier own country as there is little market demand due to the local tax legislation. [Especially amongst mobile expat workers] ]There is real feeling of unfair play as financial aspects such as pensions and tax wrappers are unfairly peanalized from one country to another according to nationalist sentiment, thus those who use such jurisdicitons often feel justified in doing so.
Tax efficient investment vehicles in one EU country should be viewed in the same manner in another country. As it stands there is a serious disjoint between countries, for example what is tax efficient in the UK (an ISA for example) is heavily taxed in France and Germany, whilst French and German life insurance products are tax efficient in those countries but the UK taxes such products on a massive deemed gain of 15%p.a. The solution- just go to a country where you can get any product you wish….ohh and its secret…. temptation then takes over….
These jurusdictions have a place in a society where many people are part of the highly mobile European workforce. Until EU Governments make tax and and pensions legislation a cohherent part of thier “employee mobilty” pact then these jurisdictions will continue to thrive.
Richard
Lets be clear: terrorism is a very small threat. A real one, I agree. But let’s put this in context. When did Germany last suffer a terrorist attack? It is suffering massive tax attack.
As for your other arguments: irrelevant excuses I’d say, not least because 99% of people are not mobile and have no desire to be.
Please do not excuse crime.
Richard
“These jurusdictions (sic) have a place in a society where many people are part of the highly mobile European workforce” Richard R
And I think many people would say that the tactics of the German Revenue are entirely justified when the “mobile European workforce” of which you speak consists amongst others of Postman Pat chief execs of public utilities whose “high mobility” is principally demonstrated by their willingness to drive over a couple of borders with a car-boot stuffed full of Euros to deposit in a bank for the account of an anonymous foundation from which they can benefit tax free. That stretches “arranging your affairs tax-efficiently” to rather an unacceptable extent. No doubt the book will be thrown at him, as it should be.
All that said your point about tax breaks available in one country not applying in another is correct.
Richard
I am most definately not excusing crime, and I am certainly not trying to excuse those who are illegally evading tax.
My point was simply that it was the BVD (German Secret Service) who aquired this data. Thus, the discussion starts to descend into a debate about oppression and the role of the security services. Had the data been obtianed by the Tax/Revenue service directly then I think it would have been more “palletable” / “ethical” – (not wanting to take this thread off track).
My second point is simply that there needs to be a coordinated approach at the European level to harmonize tax regimes where possible, something that is veremently opposed by most EU Governments.
Richard R
Richard
I admit I see the BVD as an agent of the state and the revenue service likewise. If one acts for the other, so what?
I do support harminisation fo tax regimes e.g. the CCCTB. I see the issues you raise as of much less significance. Who cares if an ISA is taxed unfairly elsewhere? Get rid of it is the easy answer. If all probelms could be solved so readily. Even pensions are just optional savings schemes, and nothing more.
Richard