Here’s an op-ed written for the NYT by a Swiss researcher for Liberales Institut who suggests that Swiss banks need to be left alone. This follows after controversies boiling mainly between the US IRS and UBS, but involves alleged tax evaders in the US and the Swiss government, which has jurisdiction over UBS, the biggest Swiss bank.
The writer pointed out several points why banks must be left to themselves. I don’t really agree with many of the things he said, but I’m giving notice for some of the interesting points that have been raised in the editorial piece.
Point 1: “But for us here in Switzerland, our financial privacy laws are a foundation for individual dignity and basic property rights.”
That sounds very noble and I bet that sure does mean a lot for both Swiss and non-Swiss bank clients alike.
Point 2: “Switzerland… has also come under fire from the European Union for offering too-favorable tax rules, including exemptions for income earned abroad. But what critics forget is that these practices also benefit other countries.”
I’ll take his word that the tax legislation are too favorable. With that said, I can’t help but have that “so what?” feeling when he argued the practices also benefit other countries, such as the US apparently. Not that I am favoring higher taxes. I am on the belief that if something is deemed inappropriate, regardless of its “benefits”, there is not much to argue – something has to change. Or we merely prolong the bad. So in the context of this, the “too favorable” tax rules might be benefiting people, but if they are not up to par with what is right and necessary (and this involves a lengthy discussion on what is right and necessary and who should be covered by such a rule and who shouldn’t), why tolerate it?
The writer, however, follows by saying Swiss tax rules allow companies to escape multiple taxation that eats up on available capital for investment. That I can take.
Point 3: “While tax fraud is considered a crime here, tax evasion is not (though it can be subject to fines).”
I find that quite amazing.
Point 4: “Swiss privacy laws help preserve basic property rights. Bank secrecy was introduced in 1934, most notably to protect the identities and assets of Jews in Nazi Germany.”
Another trivia. If secrecy laws are used to protect an innocent, then by all means, go ahead. But not all the UBS clients are facing imminent danger, are they?
Point 5: “They must alert the regulators if they suspect criminal behavior.”
But that would be irrelevant if Swiss bankers themselves deem tax evasion by foreign nationals as a non-crime.
Point 6: “We will not solve the global problem of tax evasion by punishing honest depositors and destroying Swiss traditions.”
Agree. And he partly wins the argument here, IF all 52,000 UBS clients are indeed innocent. That innocence is something that MUST be first established before Uncle Sam goes on and proceed with their tax evasion case. IF the US is able to prove wrongdoings, then I don’t think Swiss traditions can do much.
The entire op-ed HERE.