Leave Swiss Banks Alone

Discussion in 'Economy & Infrastructure' started by Daredevil, Aug 4, 2009.

  1. Daredevil

    Daredevil On Vacation! Administrator

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    Leave Swiss Banks Alone

    By PIERRE BESSARD
    Zurich

    LAST week, an American client of the Swiss bank UBS admitted to filing a false tax return and concealing millions in Swiss bank accounts. For some people, his plea will just confirm their impression of Switzerland as a haven for criminals or dictators who want to protect their funds from taxes or oversight.

    But for us here in Switzerland, our financial privacy laws are a foundation for individual dignity and basic property rights.

    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 Cooperation and Development 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. 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.

    Until recently, the Swiss government had steadfastly insisted on Swiss sovereignty and refused to provide assistance to other governments in cases of tax evasion — that is, cases in which a taxpayer failed to declare income, either intentionally or unintentionally. While tax fraud is considered a crime here, tax evasion is not (though it can be subject to fines).

    This Swiss peculiarity of considering tax evasion as a mere administrative offense has a long history. We think government exists to serve us, not the other way around. We understand that we have to pay taxes — and we do, with numerous studies showing that the Swiss are extraordinarily honest about paying what we owe — but we do not think it is the government’s role to intrude on our privacy and wrench them from us.

    This attitude goes back to Switzerland’s founding in the 13th century. The original Swiss communities’ resentment of what they saw as the Hapsburgs’ oppressive taxes helped push them to claim their independence in 1291.

    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.

    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. (Unfortunately, those same rules made it difficult for some heirs to gain access to these accounts without proper documentation, leading to an out-of-court agreement in 1998 by Swiss banks to pay $1.25 billion to settle Holocaust-related lawsuits.) 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.

    Some would argue that Swiss bank accounts offer the same protections to criminals, but in fact Swiss provisions against money laundering are tough. Swiss bankers are required to know their clients and the origin of the funds they accept. They must alert the regulators if they suspect criminal behavior.

    Banking confidentiality enjoys overwhelming support in Switzerland. According to the latest annual survey by the polling firm M.I.S. Trend, 78 percent favor maintaining the laws as they are, and 91 percent are shown to value their financial privacy. This is especially relevant since Swiss citizens are expected to vote eventually on the renegotiated tax treaties in a referendum.

    If the government fails to convince a majority of voters, the treaties won’t enter into force. But if they are ratified as planned, the Swiss government should agree only to an exchange of information in individual cases with reasonable suspicion of tax fraud.

    Other governments should see this as a fair compromise. We will not solve the global problem of tax evasion by punishing honest depositors and destroying Swiss traditions.

    Pierre Bessard is the president of the Liberales Institut, a research institution.
     
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  3. SATISH

    SATISH DFI Technocrat Stars and Ambassadors

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    With Indians hlding trillions of dollars there these people must think how much good that money would be doing when it is outside in the economy...
     
  4. ajay_ijn

    ajay_ijn Regular Member

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    may be Swiizterland doesn't realise still how many countries and general public suffer because of tax evasion.
    if Govt doesn't have enough tax revenue, they cannot produce money by printing them, money doesn't grow on trees either, the poor people suffer because govt doesn't have enough money to serve for their needs, look after their welfare, govt suffers from deficit which puts more pressure on budget allocation.

    on the other hand Swiss banks enjoy bigger desposit base, allows them to carry out big investments. They know its crime but who cares when ur getting money without being punished.

    Switzerland is not being punished. World should agree to do that. As long we don't it seriously, why would Swiss have a problem with getting so much money into their country. They make all kinds idiotic excuses like these to defend. but threatening them financial isolation is the right way to deal with these black-money bankers. This is as big a crime as smuggling.

    thats right, may be other countries should organise professional smuggling teams to smuggle goods into Swiss without paying taxes. force Switzerland to suffer from huge budget deficits and make them realise the real issues.

    the only fair compromise is giving back every penny to respective countries which was illegally brought to swiss banks.

    honest depositors?
    why would any honest idiot take the all pains to put his money to into banks of some other country unless they offer huge interest rates compared to his own countries banks.
     
  5. 1.44

    1.44 Member of The Month SEPTEMBER 2009 Senior Member

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    Yet still so many people manage to take advantage of the swiss banking system's privacy.
    Despite all these measures swiss banking system is extremely vulnerable to money laundering,financing of terrorist organizations etc.

    Btw:How many people on DFI have secret swiss bank accounts?:D
     
  6. ajay_ijn

    ajay_ijn Regular Member

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    not just evading tax. what about all the govt officials who earned crores by accepting bribes from general public and business persons? don't Swiss idiots atleast realise that.
     
  7. Daredevil

    Daredevil On Vacation! Administrator

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    Good that OECD already took steps in isolating switzerland. It has done only when they have started facing recession and needed money badly, otherwise they would have allowed the swiss-banks to have their wayward way.

    If swiss-banks doesn't release the information about the account holders, all other countries should financially isolate switzerland by blocking all money transfers to and fro.
     
  8. natarajan

    natarajan Senior Member Senior Member

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    just imagine if we manage to get some 25 lacs crore
    we can get some
    3 super carrier
    lots of nuke submarines,destroyers,cruisers
    we can become super power:2guns::2guns:
     
  9. ajay_ijn

    ajay_ijn Regular Member

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    i am imagining how can they can be invested in right areas to improve our infrastructure, health, education etc.
     
  10. Sridhar

    Sridhar House keeper Moderator

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    PM Singh has said in parliament the process has been started to get the money back to India.Any one know more on this ?
     
  11. 1.44

    1.44 Member of The Month SEPTEMBER 2009 Senior Member

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  12. Daredevil

    Daredevil On Vacation! Administrator

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    I remember an interview of Arun Shourie/ Pranab Mukherjee on Devil's advocate. They were pointing at having some names from the swiss-banks through the German government. But the list has not been made public for unknown reasons. Let me try to find a link for this.

    Added Later:

    This is what I was talking about (read the bold part)

     

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