♠ Posted by Emmanuel in Casino Capitalism at 2/22/2009 10:51:00 AMSo it had come to pass: I have previously discussed various industrialized countries bearing down on tax havens of every sort as times get tough and state revenues dwindle. At the moment, the US is waging jihad against Switzerland's standard bearer, UBS. Having applied a $780 million fine on UBS and obtained cooperation from Swiss authorities to fork over details about American tax dodgers, America is now going after what it believes are $14.8B in squirreled assets among 52,000 account holders. It appears the Swiss are drawing the line at the latter demand. Those with short memories are once again blabbing about "the end of Swiss bank secrecy" [1, 2]. Again, the inviolability of this confidentiality is much overstated. Consider the case of Philippine despot Ferdinand Marcos, against whom the Philippine government has been able to recover ill-gotten wealth stashed in Zurich and Lichtenstein [1, 2]. As with despots, there are always exceptions, and this is one of them.
More immediately important for this case, there is a brewing political backlash in Helvetia. The xenophobic SVP--currently its largest party--is calling for "No More Mr. Nice Guy" with Uncle Sam over this episode of rough treatment. Reuters details the tit-for-tat the SVP wants to engage in:
The right-wing Swiss People's Party (SVP) called on Saturday for retaliation against the United States over a U.S. tax probe into the country's biggest bank UBS that threatens prized banking secrecy. The populist SVP, the country's biggest party, said Switzerland should not take in any detainees from the U.S. prison for terrorism suspects at Guantanamo Bay in Cuba, which the Swiss government said last month it could consider to help shut the camp down.Is it brass knuckles time for these financial combatants?
Switzerland should also reconsider its policy of representing the United States in countries where it has no diplomatic presence, the parliamentary SVP said in a statement. The SVP said gold stored by the Swiss National Bank in the United States should be repatriated and Switzerland should ban the sale of U.S. funds in the country to protect Swiss investors after the failure of U.S. regulators.
The SVP has one minister in the seven-member Swiss government which is made up of the biggest four parties, but its populist policies have shaken up usually consensual Swiss politics.
The comments came after UBS agreed on Wednesday to pay a fine of $780 million and to disclose about 250 names of U.S. clients it said had committed tax fraud to settle U.S. criminal charges that it had helped rich Americans dodge taxes. U.S. tax authorities said on Thursday they were still pursuing a civil case against UBS seeking access to thousands more names of U.S. citizens it says are hiding about $14.8 billion in assets in secret Swiss bank accounts.
UPDATE: Also see news of EU leaders agreeing to press the matter of tax havens at the upcoming G-20 meeting (which I will have more to say about later). The question is, will American banks in their weakened state still be able make a case for maintaining these tax havens to Uncle Sam? Britain's banks have already buckled under French and German pressure.