Outlook: So the credit crunch has achieved something the world had been trying to do for more than 70 years: getting the Swiss to give up more information on who has stashed what in the country's secret bank accounts.
It's not been the best few days for those keen to keep their affairs hidden from the prying eyes of their home country's tax authorities. On Thursday, Liechtenstein and Andorra said they were toning down their bank secrecy laws. Yesterday, Austria, Luxembourg and – the big one – Switzerland all said they would follow suit.
What has spooked these countries like never before is the threat of a concerted international attack on tax havens from the rest of the world. A crackdown on nations that enable other countries' residents to avoid – and evade – tax is one of the topics up for discussion at this weekend's meeting of the G20 nations' finance ministers.
Switzerland's banks are thought to have around $2 trillion stashed away on behalf of international depositors. Until now, they've got away with refusing to share the information about these accounts on the basis of a legal technicality concocted by Swiss legislators in 1934 (in the same laws as those that threaten heavy penalties, including prison sentences, for Swiss nationals who disclose banking secrets). Under Swiss law, the only circumstances in which banks can provide other countries with details of customers' accounts is if they receive a detailed claim about a specific individual with precise information about criminality of which they are suspected. Tax evasion – illegal everywhere else in the world but only a civil matter in Switzerland – doesn't count, by the way.
Understandably, many countries feel disgruntled about their citizens – the wealthiest of them, naturally – hiding their cash in Switzerland in order to get away with paying less tax back home. The US alone estimates it loses $100bn in tax revenues each year because of banking secrecy in Switzerland and other tax havens. The TUC reckons the equivalent figure for the UK might be £4bn a year.
Hans-Rudolf Merz, the Swiss Finance minister, said yesterday that he thought international co-operation on tax matters was more important these days, "given the globalisation of financial markets and in particular against the background of the financial crisis".
Mr Merz might, if he was being honest, have added that a $780m fine just copped by UBS, one of Switzerland's biggest banks, has also focused minds. UBS had to cough up the cash after an American investigation into US nationals thought to be hiding money through the bank. There's an ongoing row about 52,000 clients of UBS the Americans want to know more about.
The Swiss also don't like the idea of their names going on to an OECD blacklist, which was a distinct possibility before yesterday's concessions, though quite how it has avoided being named and shamed in this way until now is a mystery to most people.
The question now, of course, is just how honourable Switzerland's intentions really are. The Swiss have promised to share more information, making judgements on what they'll share on a case by case basis. If that's just hot air – and they're still muttering about tax amnesties and other bells and whistles – let's hope the OECD holds them to account sooner rather than later. If it's a genuine commitment, this might spell the end of Swiss banking, 75 years after the industry was invented.
That, by the way, might have one benefit for Switzerland. It is increasingly exercised about the soaring value of its currency, particularly against the euro – if all those tax evaders, avoiders and so on now depart for tax havens new, at least the Swiss franc might come down in value.
That's by the by, however. Imagine what good an extra £4bn of tax revenue could do in this country, if the TUC's estimate is correct. Let alone the $100bn the US reckons it might net annually. Why on earth should people get away with this level of tax evasion, let alone enjoy the acquiescence of a foreign government that purports to be a good friend and neighbour?Reuse content