Yesterday the Chairman of UBS announced his resignation. This announcement comes at the same time as Senate investigations into the Swiss bank are taking place in Washington. The investigation into UBS is aimed at getting the bank to reveal more information about its US clients, whom the bank actively and knowingly helped to evade $220 million in income taxes and $20 billion in assets from the IRS between 2000 and 2007. The Swiss bank, in cooperation with the Senate, has already divulged information about 250-300 of its clients.
In response to this release of information, the entire Swiss banking industry is raising outcries, stating that the UBS case will lead to the end of banking secrecy, a cornerstone of the Swiss economy. Meanwhile, the US recently announced the 2009 version of the Stop Tax Haven Abuse Act, which will crackdown on tax evaders.
It is interesting that these issues are all coming together now. The Swiss have been famed for their banking secrecy since WWII and thus far the US has taken no steps towards harsher punishments for US citizens who use the Swiss system to evade taxes. With the financial crisis, however, the government wants to show the people it is doing something to get the financial situation under control and to regain money that has been lost to tax evasion.
Personally, I think that collecting government revenue from tax evaders is not a bad idea, but realistically it will be almost impossible to end the established systems of banking secrecy and tax havens.
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Yea I agree. There are plenty of better options when it comes to dealing with tax havens. Forcing foreign banks to forfeit secrecy is probably the least effective and the most confrontational.
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