At the G8, Switzerland is the elephant in the room

"The era of bank secrecy is over." Maybe.

Another day, another plea. This time the European Union official in charge of tax policy, Commissioner Algirdas Semeta, has tried to persuade Switzerland to agree to surrender bank data as part of a drive to combat tax evasion.

Semeta’s request echoes several others that Switzerland has received in the past year to sign up for bank data transparency deals.

Countries particularly within the EU are continuously facing a push to sign up for bank data sharing agreements to assist a clamp down on tax debtors, and allow countries to conduct wide-ranging joint multiparty tax investigations. Globally, more than 50 countries have, so far, agreed to automatically exchange tax information.

Prime Minister David Cameron got ten overseas territories and dependencies to sign up for the international protocol on tax disclosure over the weekend – after much ado – and hailed the "landmark" Lough Erne agreement yesterday at the G8 Summit to rewrite global rules to stamp out tax evasion.

Europe’s big five – UK, France, Germany, Italy and Spain – started piloting the multilateral tax information exchange in April 2013, based on a Model Intergovernmental Agreement to improve international tax compliance and implement FATCA developed between these countries and the US. Austria is expected to join soon as well.

However, the elephant in the room is Switzerland – and its non-commitment to any of these agreements. It is also clear that the support of several other countries is dependent on deals Switzerland strikes.

For instance, Luxembourg’s Prime Minister, Jean-Claude Juncker, said the country would prefer there to first be negotiations with Switzerland, and Luxembourg will decide on its actions accordingly.

Being a $2trn offshore tax haven, Switzerland has a long tradition of bank secrecy that has made it the world's biggest offshore centre.

There is of course a thin line between privacy and secrecy. It’s not wrong to have offshore accounts. Switzerland is, perhaps, taking its sweet time only because it’s protective about its banks and clients.

However, Swiss Finance Minister Eveline Widmer-Schlumpf said, at the G8 summit on Monday, the Swiss government would probably "only be able to start formal talks with the EU" in the autumn, and would push for global standards on data exchange at the OECD.

Widmer-Schlumpf added that for Switzerland, it is important to engage itself "for a level playing field, not just within the EU but beyond the EU".

The "beyond EU" part is absolutely crucial for Switzerland too.

It’s no secret that Switzerland is under tremendous pressure from the US for bank data as well, what with its oldest private bank, Wegelin& Co pleading guilty to charges of helping wealthy Americans evade taxes through secret accounts earlier in the year, and paying $58 m in fines to US authorities.

Back in 2009, Swiss banking giant UBS was fined $780m and forced to deliver names of more than 4,000 clients to avoid indictment.

On last count, 14 Swiss banks were in US investigators' sights for aiding Americans evade taxes.UBS and Credit Suisse were even named in a wide-spread investigation by The International Consortium of Investigative Journalists (ICIJ) into offshore tax evasion.

Not that Switzerland is not paying heed. The Swiss government agreed to create a legal basis to enable its banks to settle investigations by US authorities, which could require lenders to pay up to billions of dollars in fines.

But as of yesterday morning, the lower house of parliament stalled the "Lex USA" bid, refusing to address a bill that allows banks to sidestep strict Swiss secrecy laws, even though the upper house of parliament had voted in favour of it, posing another roadblock in the settlement of the long running US-Swiss tax dispute.

Switzerland is clearly the joker in the pack and its movements can either make way for a complete data transparency code among countries, or block it. And it’s moving cautiously.

Semeta said at the G8 meeting on Monday, "It is widely accepted worldwide today that the era of bank secrecy is over." Most will believe it when Switzerland accepts it.

Photograph: Getty Images

Meghna Mukerjee is a reporter at Retail Banker International

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Find the EU renegotiation demands dull? Me too – but they are important

It's an old trick: smother anything in enough jargon and you can avoid being held accountable for it.

I don’t know about you, but I found the details of Britain’s European Union renegotiation demands quite hard to read. Literally. My eye kept gliding past them, in an endless quest for something more interesting in the paragraph ahead. It was as if the word “subsidiarity” had been smeared in grease. I haven’t felt tedium quite like this since I read The Lord of the Rings and found I slid straight past anything written in italics, reasoning that it was probably another interminable Elvish poem. (“The wind was in his flowing hair/The foam about him shone;/Afar they saw him strong and fair/Go riding like a swan.”)

Anyone who writes about politics encounters this; I call it Subclause Syndrome. Smother anything in enough jargon, whirr enough footnotes into the air, and you have a very effective shield for protecting yourself from accountability – better even than gutting the Freedom of Information laws, although the government seems quite keen on that, too. No wonder so much of our political conversation ends up being about personality: if we can’t hope to master all the technicalities, the next best thing is to trust the person to whom we have delegated that job.

Anyway, after 15 cups of coffee, three ice-bucket challenges and a bottle of poppers I borrowed from a Tory MP, I finally made it through. I didn’t feel much more enlightened, though, because there were notable omissions – no mention, thankfully, of rolling back employment protections – and elsewhere there was a touching faith in the power of adding “language” to official documents.

One thing did stand out, however. For months, we have been told that it is a terrible problem that migrants from Europe are sending child benefit to their families back home. In future, the amount that can be claimed will start at zero and it will reach full whack only after four years of working in Britain. Even better, to reduce the alleged “pull factor” of our generous in-work benefits regime, the child benefit rate will be paid on a ratio calculated according to average wages in the home country.

What a waste of time. At the moment, only £30m in child benefit is sent out of the country each year: quite a large sum if you’re doing a whip round for a retirement gift for a colleague, but basically a rounding error in the Department for Work and Pensions budget.

Only 20,000 workers, and 34,000 children, are involved. And yet, apparently, this makes it worth introducing 28 different rates of child benefit to be administered by the DWP. We are given to understand that Iain Duncan Smith thinks this is barmy – and this is a man optimistic enough about his department’s computer systems to predict in 2013 that 4.46 million people would be claiming Universal Credit by now*.

David Cameron’s renegotiation package was comprised exclusively of what Doctor Who fans call handwavium – a magic substance with no obvious physical attributes, which nonetheless helpfully advances the plot. In this case, the renegotiation covers up the fact that the Prime Minister always wanted to argue to stay in Europe, but needed a handy fig leaf to do so.

Brace yourself for a sentence you might not read again in the New Statesman, but this makes me feel sorry for Chris Grayling. He and other Outers in the cabinet have to wait at least two weeks for Cameron to get the demands signed off; all the while, Cameron can subtly make the case for staying in Europe, while they are bound to keep quiet because of collective responsibility.

When that stricture lifts, the high-ranking Eurosceptics will at last be free to make the case they have been sitting on for years. I have three strong beliefs about what will happen next. First, that everyone confidently predicting a paralysing civil war in the Tory ranks is doing so more in hope than expectation. Some on the left feel that if Labour is going to be divided over Trident, it is only fair that the Tories be split down the middle, too. They forget that power, and patronage, are strong solvents: there has already been much muttering about low-level blackmail from the high command, with MPs warned about the dire influence of disloyalty on their career prospects.

Second, the Europe campaign will feature large doses of both sides solemnly advising the other that they need to make “a positive case”. This will be roundly ignored. The Remain team will run a fear campaign based on job losses, access to the single market and “losing our seat at the table”; Leave will run a fear campaign based on the steady advance of whatever collective noun for migrants sounds just the right side of racist. (Current favourite: “hordes”.)

Third, the number of Britons making a decision based on a complete understanding of the renegotiation, and the future terms of our membership, will be vanishingly small. It is simply impossible to read about subsidiarity for more than an hour without lapsing into a coma.

Yet, funnily enough, this isn’t necessarily a bad thing. Just as the absurd complexity of policy frees us to talk instead about character, so the onset of Subclause Syndrome in the EU debate will allow us to ask ourselves a more profound, defining question: what kind of country do we want Britain to be? Polling suggests that very few of us see ourselves as “European” rather than Scottish, or British, but are we a country that feels open and looks outwards, or one that thinks this is the best it’s going to get, and we need to protect what we have? That’s more vital than any subclause. l

* For those of you keeping score at home, Universal Credit is now allegedly going to be implemented by 2021. Incidentally, George Osborne has recently discovered that it’s a great source of handwavium; tax credit cuts have been postponed because UC will render such huge savings that they aren’t needed.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 11 February 2016 issue of the New Statesman, The legacy of Europe's worst battle