An end to cherry picking?

Until that ominous Friday, the thirteenth of March, when the Federal Cabinet announced concessions in the matter of tax evasion, Switzerland's international financial market policy had two overriding objectives: first, protecting tax evasion secrecy for foreigners, and second, avoiding competitive disadvantages for our financial companies as a result of international regulations and standards. The first objective has now been radically modified but is still under discussion. The collapsing financial markets have left the second objective woefully inadequate, and it is therefore to be urgently substituted by a committment to the re-regulation of the financial markets.

As regards our future foreign fiscal policy, there are currently two possible options in discussion. Switzerland could try to find new tax loopholes for foreigners, for example by offering trusts along the lines of the British model, as well as other legal vehicles, thereby continuing the old policy. Or it could renounce this and advocate a comprehensive international ban on such instruments. The conditions for this latter option have never been better than today. The present pressure on tax havens is not just because crisis-stricken countries need more money, as the shortened explanation goes. It is above all a result of the dramatic loss of prestige suffered by financial market players and economic elites. Over the past 40 years their lobbies have been able to secure from all governments the toleration and encouragement of tax havens and loopholes – including in Germany, France and the USA.

Such a forward-looking foreign fiscal policy would eliminate the most significant incoherence in the Swiss development policy – that is giving with one hand some aid (not too much) and protecting with the other flight capital from developing countries. In our view, besides eliminating tax evasion secrecy and providing administrative assistance to all countries, it would also be ideal to extend the agreement with the European Union for taxing the saving incomes of financial investments by non-residents to the developing countries. The Federal Cabinet made just such an offer last December at the UN conference on Financing for Development in Doha, without fleshing it out any further.

In discussing the pending double-taxation agreements with developing countries, the Parliament should take this aspect into account. Whereas France has already demanded renegotiations of its supplementary agreement, the developing countries are being fobbed off with the usual clause under which their tax dodgers are guaranteed our full protection. Should the Parliament simply rubber-stamp this?

Peter Niggli, Director of Alliance Sud