“Switzerland supports the broad-based funding concept enunciated in the Addis Ababa Action Agenda, which contemplates the mobilisation of both domestic and international resources, and which mentions policy coherence as a key pillar. By committing to the 2030 Agenda slogan of ‘leaving no-one behind’, Switzerland likewise places a focus on the most disadvantaged.” These were the words used by the Federal Council in Switzerland’s Country Report 2018 on the implementation of the 2030 Agenda. Yet the Federal Council offered no answer to the question of how Switzerland would contribute concretely to the public funding of the UN Sustainable Development Goals, which the UN estimates will require total funding of 7000 billion annually until 2030. It had been hoped in the meantime that in drawing up the Sustainable Development Strategy (SDS) the Council might have remedied this. From the text published in early November for public consultation on the Strategy, however, it is clear that the Federal Council has dashed these hopes entirely.
The SDS draft contains exactly two sentences on the matter of what Switzerland could do – as a world-leading offshore financial centre and a prominent country of domicile for multinational corporations – to counter money laundering, corruption, as well as tax flight, which is hampering to development. On page 29 the Federal Council writes: “Switzerland is committed to […] curbing illegal financial flows. At the international and domestic levels, Switzerland advocates for the elaboration and implementation of effective standards to increase transparency as well as to prevent and combat the illegal activities underlying these financial flows.”
That is all, and it falls clearly short of what the Federal Council wrote two years ago on the implementation of the 2030 Agenda. From the standpoint of sustainable development that contemplates not just the implementation of the 2030 Agenda at the domestic level, but is also mindful of Switzerland’s global influence as a financial and business centre – this is sheer cynicism.
Switzerland attracts flight capital…
Switzerland still has no strategy for preventing the outflow of potential tax revenues from developing countries. Those countries are still losing billions of francs through tax avoidance and tax optimisation. Switzerland is still home to the world’s largest offshore financial centre: at the end of 2019, Swiss banks accounted for 25 per cent of the world’s assets under management. Figures provided by the Swiss Bankers Association show the cumulative sum of foreign assets to be 3742.7 billion francs. As a low-tax jurisdiction for corporations, Switzerland is also host to the head offices of hundreds of multinational corporations. Switzerland therefore bears a substantial share of responsibility for outflows of private assets from developing countries as well as for profit shifting by corporations from countries of production in the South to tax oases in the North. This is so because automatic information sharing of bank client data and corporate accounting data is not (yet?) operational with most developing countries. Furthermore, Switzerland’s current financial and fiscal policies make the country a major driver of global tax competition, which has the effect of pushing tax rates ever lower, especially for corporations, and of forcing many governments to make increasingly drastic budget cuts. Those worst affected as a result are the neediest in society.
…instead of combatting it
If Switzerland wishes in the future to be a financial centre with a business model that is no longer at odds with the goals of the 2030 Agenda, it cannot be content merely to implement the new tax transparency minimum standards established by the OECD and the G20. As a leading global player in the finance industry the country would be well advised instead to assume a pioneering role in promoting the equitable global distribution of private wealth and corporate profits. This would mean championing the genuine implementation of tax transparency worldwide both in regard to financial accounts (different forms of information exchange between tax authorities) and to country-by-country corporate reporting. Developing countries too would stand to gain from it. This would furnish them with at least some of the data indispensable to tax authorities if they are to stem the outflow of potential tax revenues towards tax havens. This in turn is necessary if countries in the South are to become capable of generating more of their own tax resources for their sustainable development.