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

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
Show Hide image

Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

0800 7318496