LEAVE SWISS BANKS ALONE
August 4, 2009
In Switzerland, financial privacy laws are a foundation for individual dignity and basic property rights, says Pierre Bessard, president of the Liberales Institut, a research institution. Unfortunately, the confidentiality that is the hallmark of Swiss banking is coming under increasing pressure. The global economic crisis has led some governments to intensify efforts to seek tax revenue abroad -- and Switzerland, which accounts for nearly 30 percent of all offshore private wealth, is a natural target.
Earlier this year:
- Switzerland was put on a "gray list" by the Organization for Economic Co-operation and Development (OECD) and threatened with financial sanctions, leading the government to provisionally renegotiate tax agreements with a dozen countries so far.
- Most of those agreements would require Switzerland to hand over individuals' financial information for tax purposes in accordance with the organization's standards.
- The United States Justice Department went even further and filed a lawsuit against UBS, seeking the names of 52,000 account holders suspected of hiding money from the Internal Revenue Service (the United States and Switzerland agreed in principle on Friday to settle the matter out of court).
Switzerland, which is home to an impressive number of global corporations, 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, says Bessard:
- Swiss firms alone employ hundreds of thousands of people in the United States and Germany, for example.
- Subsidiaries of multinational corporations usually pay income taxes where they operate, so having their headquarters in Switzerland can help companies avoid multiple taxation in high-tax countries, thereby safeguarding productive capital for investment.
Today, Swiss citizens continue to vote on any tax increases in referendums (and sometimes even accept them). These healthy curbs on government contrast with the Orwellian concept of the "transparent citizen" whose every act is known to government. We see our system as a social pact between citizens and the state, says Bessard.
Swiss privacy laws help preserve basic property rights, says Bessard. Bank secrecy was introduced in 1934, most notably to protect the identities and assets of Jews in Nazi Germany. Corruption, expropriation, crime and the persecution of various minorities remain risks in most of the world. For people threatened by such risks, financial privacy can protect their legitimate property.
Source: Pierre Bessard, "Leave Swiss Banks Alone," New York Times, August 3, 2009.
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