Tax Collectors Target Swiss Banks
November 5th, 2012
Switzerland has long been a place that respects and protects one of the most basic of economic rights… privacy. In 1934 they made it illegal for banks to divulged information about a client’s accounts to foreign governments except in cases of the most serious crimes. Tax evasion was not deemed serious enough. But now it seems their parasitic debt-ridden neighbors are gazing longingly at their undisclosed untaxed vaults and imagining they contain a solution to the brush fire sweeping through the European economy.
Germany, Britain and others have but Switzerland’s tradition of strict banking secrecy in their cross-hairs in their insatiable search for more taxable wealth. Even the US is taking part in the assault.
Very soon the German Parliament will vote on a treaty (which sounds like more of a threat) with Switzerland that would require Swiss banks to withhold taxes from the accounts of German clients, or face a policy of isolation. Austria and Britain have already signed such “agreements” with Switzerland, and it’s looking like the threat of ostracism could force them to hand over their ledgers to the tax collectors of the world, putting an end to their status world’s longest standing tax haven.
Of course, no one is really sure just how much of Switzerland’s banking sector consists of tax evasion… because it’s secret after all. So, forced transparency could potentially mean a collapse of much of their banking sector, which could have all kinds of unintended consequences. Last week UBS, Switzerland’s largest bank, announced it was cutting 10,000 jobs. Economists forecast more lost jobs and a drop in the country’s gross domestic product. It could also impact firms like Credit Suisse are produce much of the world’s gold bullion. Who knows, maybe a shift in national self-image of this magnitude could have a long standing effect on other basic Swiss values… like military neutrality.
The chief executive of UBS, Sergio Ermotti, recently broke a long-standing taboo in his industry when he divulged that his bank held between $13 billion and $32 billion in untaxed deposits to a local new paper. He also said that the country ought to do away with banking secrecy altogether. So, as is so common in other countries, the bankers are in lockstep with the demands of the State, only in this case it’s not even his State. I guess the culture of privacy is changing.
In the negotiations of these treaties Switzerland has been trying to preserve depositors’ anonymity by handing over lump sums to tax authorities, rather than be forced into complete transparency, but it’s really only a matter of time before financial privacy for Swiss banks is thing of the past. Meanwhile, the tax parasites are simply incapable of patience. In Germany stolen CDs of Swiss banking records lead to home invasions of Swiss bank clients in North Rhine-Westphalia. In Greece a thumb drive of Swiss banking records leaked by a Greek journalist could lead to similar raids.
The US has been targeting the Swiss banks since 2009, demanding penalties of up to 30% from banks that helped Americans escape the IRS goons, or ever refused to hand over a US account holder’s private data. The IRS even gave $104 million to a whistleblower inside UBS for leaking account data to them. Many foreign banks simply won’t accept American clients anymore.
“Switzerland does not want to be under pressure from foreign governments,” said Christine Hirszowicz, an emeritus professor of banking at the University of Zurich. “Switzerland is a small country. Its independence is all it has.”
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