SPD Plans to Block Rubik Ratification in Germany

The SPD’s financial concept note published last Monday rejects the agreement with Switzerland. It is now quite likely that the deal will be rejected by the Upper Chamber, the Bundestat. North Rhine Westphalia’s Finance Minister Walter Borjans argued that effectively giving an amnesty to tax evaders was unconstitutional. Nicolotte Kressl and  SPD finance experts in the Bundestag said the deal should be halted as not to undermine EU efforts to secure automatic exchange of information with Switzerland.

EU to Look into Legality of the Deals

The European Commission is analyzing whether the final withholding tax deals are compatible with EU law. “We had many contacts with Germany and Great Britain, which assured us that their bilateral agreements would not infringe the European directive on savings taxation or the Union’s agreement with Switzerland. We’re going to check all that. It is clear that in the light of international law, the directive and the EU-Switzerland agreement take precedence over the bilateral agreements initialed in August,” EU Taxation Commissioner Algirdas Semeta said to reporters on 8 September. The European Council Working Party on Direct Taxation will meet on 22 September and the commission has requested that Germany and Britain present the full text of their agreements with Switzerland at this meeting.  However, it does not seem that the commission opposes the deals but rather that it might use them to win some small further concessions from Switzerland, either expanding the scope of information exchange on request or bringing in other types of investment.

Luxembourg and Austria did not want to take part in automatic exchange of information as part of the European Savings Tax Directive (EUSTD), so they won an opt-out allowing them to temporarily use a withholding tax method instead. Now Luxembourg is arguing for an extension of this arrangement in the light of the Rubik deals. The EC maintains that the original timetable must be adhered to.

If it wasn’t enough that Swiss banks have already begun to advise UK citizens to move their money to Singapore to avoid the withholding tax. There was another instance of the toothless or complicit approach of the UK authorities to tax dodging. Boilerplate concerns from business about ‘uncertainty’ were enough for the government to drop an evaluation of the UK’s double taxation treaties investigating the opportunities for tax avoidance these agreements often create. Accountants Ernst and Young cheered this saying “The Coalition pledged to take a more consultative approach to tax policy making and, from this volte face, they seem to be living up to their mantra,” i.e hastening regulatory capture and allowing companies to dictate tax policy appears to be an  official British policy.

France entered discussions with Switzerland on Rubik and rejected it for now. Some French officials reasserted their commitment to promote automatic information exchange, however other officials have hinted that the Swiss proposal might receive consideration at some point in the future. In Addition, Alfredo Gysi, head of the Association of Foreign Banks in Switzerland, one of the architects of the final witholding tax proposal, is clearly looking to tempt Italy into a similar deal. On top of vast amounts of flight capital from developing countries, it is estimated that, in total, European citizens hold roughly 700 billion Euros in Switzerland, it can be assumed much of this was never properly taxed.

WASHINGTON, DC – Amidst speculation over details of a possible tax agreement between Switzerland and Britain, Global Financial Integrity (GFI) reiterated the message that a broader, global solution to illicit financial practices and banking secrecy is needed.

“The recent agreement to remit information on secret Swiss accounts with Germany was a spot-check fix,” said GFI director, Raymond Baker. “The Swiss are handing over money and some account information without making substantive changes to a system that puts tax collection and law enforcement officials at a disadvantage.”

Under current standards, based on the Organization for Economic Cooperation and Development’s (OECD) Model Tax Convention (Article 26), countries are obliged to exchange information that is “foreseeably relevant to the correct application of a tax convention as well as for purposes of the administration and enforcement of domestic tax laws of the contracting states.”

“Under the current standard tax collection authorities are required to provide information and justification for information that is often prohibitively difficult to obtain,” said Baker. “Automatic exchange of tax information would eliminate the cat and mouse games and ensure that tax evaders cannot easily stash their money in offshore, secret bank accounts.”

It is estimated that individuals have about US$12 trillion of assets in jurisdictions other than their own countries of residence that are not declared in their own countries of residence; the lost tax revenue annually from such undeclared assets is estimated at US$255 billion. Tax evasion by corporations and other entities is also a major problem.

GFI is calling on the G20 to implement broader, global reforms at the next G20 summit, to be held in Cannes, France in November. In addition to conducting high-level outreach to the G20, GFI has launched—in coalition with NGOs from around the world—the End Tax Haven Secrecy (ETHS) campaign, a global grassroots effort calling on G20 leaders to end tax haven secrecy at the Cannes Summit.  The campaign, which just launched a new web video this month, has already generated roughly 10,000 letters to G20 leaders from individuals world-wide.  To learn more about the campaign, visit www.EndTaxHavenSecrecy.org.

Visit the Task Force on Financial Integrity & Economic Development’s portal on Automatic Tax Information Exchange for more information on the automatic exchange of tax information.

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Contact:

Monique Perry Danziger
mdanziger@gfip.org
+1 202-293-0740

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Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization which promotes transparency in the international financial system.

For additional information please visit www.gfip.org.

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David is right to draw attention to the toxic nature of a new deal between Germany and Switzerland – but the UK is also set to sign such a deal very soon.

I wrote about this in May, saying the following, and nothing has changed since:

The FT reported today that the UK is to shortly sign a new tax deal with Switzerland. As it said:

Britons with billions of pounds hidden in Switzerland will pay tax at 50 per cent under a groundbreaking deal that will legitimise their undeclared assets, according to a source familiar with negotiations between the Swiss and British governments.

The agreement, which is expected to be announced this month, marks a shift in emphasis in the international crackdown on tax havens. Over the past two years, the focus has been on lifting bank secrecy and exposing evaders.

Under the deal, £3bn is expected to be raised over the course of this parliament and investors will also pay a one-off retrospective levy in recognition of past unpaid tax.

I’ve been talking to some people about this. I think that the FT has got this story very wrong.

First, if a 50% tax rate is applied anyone who is not a 50% taxpayer in the UK will either a) tax their move out of Switzerland and suffer the lower withholding rate of 35% available in places like Jersey or b) give up secrecy and declare their tax personally in the UK and so save money. Either way the Swiss lose out and their banking secrecy is compromised so there’s no way they’ll agree a 50% withholding rate.

Alternatively, I gather the Swiss think that withholding rates applicable in the UK should be used and argue that whatever this rate is that should settle the full tax bill due on the Swiss source income so that they do not have to tell the UK’s HMRC who was paid and the recipients need not declare the income on their tax returns so that their right to Swiss banking secrecy is not compromised.

But that would mean the UK would have to agree that the de facto top rate of tax on investment income would now be 20% or every higher rate taxpayer would win by closing their UK deposit accounts and shifting them to Switzerland – after which HMRC would be entirely dependent ion the goodwill and probity of the Swiss for returning any tax that might be due – with all the accounts in question being off limits for any UK tax investigation for evermore henceforth.

Now, as  I said of this deal when it was first announced last October:

In a quite astonishing move it seems that the UK has today announced it is to give up British tax sovereignty and has granted power to determine UK taxes to Switzerland instead.

As I explained then:

In other words … the UK has … done the following:

1) Granted Switzerland the right to set the effective higher rate of tax on investment income in the UK;

2) Granted Swiss banks an everlasting competitive advantage over UK banks – because it will pay all higher rate tax payers to bank in Switzerland henceforth;

3) Denied the UK tax authority the right to make enquiries of their own choosing about the tax affairs of a British person – the Swiss now being granted the right to decide how many enquiries may be made and whether they are appropriate or not.

4) Granted criminal immunity to Swiss bakers who sell tax evasion – so allowing them to commit ongoing crime in the UK.

In the process the UK is:

a) Promoting tax evasion by its citizens

b) Promoting Geneva and Zurich over London

c) Abandoning its right to tax

d) Abandoning its rights to enforce its laws

e) Alienating the OECD

f) Abandoning the fights against tax havens.

That’s not melodramatic: that’s what’s this announcement implies.

I stand by that. If we sign this deal and the tax withholding rate is anything below 40% the UK has ceded its right to tax its subjects to the Swiss.

I think some Tories will be annoyed about that.

The rest of us should be livid.

And those responsible need to be held to account.

This is George Osborne’s brave new world of tax – helping the tax evaders’ evade.

Brilliant, isn’t it?

That’s feral leadership for you.

Cross-posted from the Tax Research UK blog…

We already blogged about the signing yesterday of the Swiss-German tax deal, and TJN’s opposition to it. This blog goes into a little more detail than before, and outlines some of the salient points of the deal. This is something that matters a great deal – because several other countries are believed to be considering doing something similar. Which, in TJN’s view, would be a grave mistake.

(Our last blog also highlights the strange, even fishy-looking timing of this deal.)

A similar agreement with the UK will follow soon, probably within just days or weeks. It is important that civil society and parliamentarians in the UK and elsewhere understand the treaty and its implications. They will soon be facing a similar deal.

The Swiss agreement with Germany consists of two main parts: a retroactive source (“withholding”) tax on undeclared German assets from the past, and a withholding tax on various kinds of capital income in the future. In both cases, the tax will be raised and transferred to Germany anonymously. And it will be considered “final”. That is, capital holders will no longer have to declare their assets to the German tax authorities. They can stay hidden.

The rate of the retroactive tax will be 19-34%, depending on the amount of the assets and the time span over which they had been accumulated. The income tax that honest German tax payers paid in recent years has been much higher than this. This is one reason why German civil society and left-wing parties have strongly criticised the deal as a very cheap amnesty for German tax evaders.

The withholding tax rate on future capital income will be 26.4%. This is equivalent to Germany’s domestic (final) withholding tax on capital earnings. In the agreement with the UK, the rate will be considerably higher, as the UK taxes income progressively.

Switzerland seems to have succeeded in bilaterally co-opting Germany and the UK. This is a major threat to the European Union’s unified struggle for automatic tax information exchange.

To be clear, however, the Swiss strategy – to send the Germans “money instead of data” – has been only partially successful. German tax authorities will receive money and are promised a framework for receiving some data from Switzerland. Under the new treaty, they will have the right to submit names of possible tax evaders with a plausible suspicion of tax evasion, and Switzerland will then have to collect and communicate these persons’ Swiss banking connections.

In summary: As with the OECD standards, you have to know what you are looking for before you ask for it. This is a very weak form of information exchange.

Still, it is arguably somewhat better than OECD standards, because even though the number of such semi-formal information requests will be restricted to approximately 500 per year, this will make it substantially easier for the German tax authorities to then submit formal requests for more thorough administrative assistance in line with the OECD’s Article 26 (which covers information exchange). However, there will be no information-sharing required for assets placed in banks in Switzerland before January 2013, when the agreement comes into force. As the Neue Zürcher Zeitung (NZZ) said:

“What would happen if Germany swept up all the names of residents of a wealthy suburb – say in Munich – and sent these to Switzerland? This is certainly a sensitive issue and it is still unclear how this will be handled in practice.

The [Swiss] Bankers’ Assocation put this in perspective, saying that the request must be justified for every specific customer, and it must be based on a plausible reason.”

Yet several Swiss observers, including within the federal administration, have stated that a “reasonable suspicion” may be established on the simple fact a person has made various short trips to Switzerland. (There are not many German who haven’t.)

And, remarkably enough, the official Swiss media information sheet on the deal calls the OECD standard (tax information exchange on request) the “OECD’s minimum standards”. This may be the first time any tax haven has implicitly acknowledged the OECD standard as being ineffective with respect to tax transparency. The Swiss press statement says that foreign tax authorities often know who may have evaded their taxes, but don’t know the person’s foreign bank connection. The new Swiss-German tax treaty will change this.

On the other hand, the new treaty also gives legal immunity to Swiss financial institutions (and their employees) that have been involved in tax evasion schemes.

In sum, the new deal – which still needs to be approved (or rejected…!) by both countries’ parliaments – is a first step towards greater Swiss tax transparency, but also a major threat to automatic information exchange. And it is without doubt an tremendously convenient deal for German tax evaders and their Swiss helpers.

There is a real risk of a domino effect happening here. Not only is the UK reportedly close to signing a deal, but Liechtenstein has expressed interest in a similar deal. France and, Spain and Greece are also thought to be considering it. Greece has already been involved in informal talks with the Swiss authorities.

Opposition parties in Germany – the Social Democrats, Greens and Left parties – have said they will oppose the deal, and these parties together hold a majority in the Bundesrat — the Senate –- where the deal must be approved before coming into force. Tthere is a lot to play for; much will depend on the mobilisation of civil society. Yesterday a campaign was launched in Germany to stop this deal.

TJN asks you to sign on here. Urgently.

For additional information, see the official Swiss (English language) media release.

Gideon/Flickr*

An imminent “final withholding tax treaty”, will allow Germany to claw back some revenue from tax evasion, but it will also protect Swiss bank secrecy and undermine the prospect of automatic information exchange.

Swiss and German negotiators will probably conclude the deal on 10^th August. The deal will then have to be approved through the respective national legislative processes, so there will be opportunities for civil society to mobilize opposition and generate debate about information exchange.

A withholding tax will be charged on income from savings and investments of German citizens with Swiss accounts, i.e those who had previously evaded tax in Germany. There will be both a one-off payment for lost income in the past, paid initially by Swiss banks, and then an ongoing tax on interest and return on capital.  However, the withholding tax will be returned anonymously, thereby protecting Swiss banking secrecy.  This is called a final withholding tax because individuals no longer have to declare these earnings in their tax return. The matter is considered to be settled and the tax authorities have less information about their citizens’ offshore earnings.

The one-off compensation for past lost earnings could raise between €1.8 Billion and €10 billion according to different estimates, and will be paid for by Swiss banks initially, who will be reimbursed if Germany can make individuals pay up. The actual tax rate has still to be finalized but it is likely to be around 25-26%.

Actually obtaining the ongoing revenue is likely to be difficult as in many cases account holders can dodge these rules by moving money betweenSwitzerland and other tax havens. Equally, the German government is probably being naïve in trusting the Swiss authorities and banks to collect taxes for them. Tax ResearchUK point out thatSwitzerland is a country that “has a proven record of facilitating crime, and being utterly indifferent to it. And that has consciously and deliberately withheld information from other governments for decades.” It will become easier forGermany to investigate a limited number of suspects under improved information exchange on request. The domestic debates might determine how many peopleGermany can request information on annually.

Britain has been in negotiations with Switzerland for a similar deal, which could also be signed on the 10^th and other countries might well follow suit.

This will undermine the prospects of further automatic information exchange deals.  An example of such an initiative is the EU European Savings Tax Directive (EUSTD) which requires member states except holdouts to automatically provide each other with information. The EUSTD applies only to wealthy individuals’ interest income however it could be broadened. For example, under the EUSTD Holland would have to automatically provide France with the details of any interest paid by Dutch banks to French citizens. This interest would then be taxed at 35%, from which Holland would keep a quarter and France the rest. Switzerland signed a similar agreement with the EU, however the money is returned anonymously which means tax collectors cannot get a clear picture of individual’s wealth. The Swiss-German treaty will strengthen the hand of holdouts Austria and Luxembourg, who also pay anonymous withholding taxes rather than sharing information. It seems Switzerland has been pursuing the final withholding tax deals to individual member states precisely to prevent a united EU pushing other states to sign automatic information exchange treaties similar to the EUSTD.

Read Mark Herkenrath and Nicholas Shaxon’s blog post for more details on the Swiss final withholding tax deals.

Read Nicholas Shaxon’s blog post on information exchange between Switzerland and India

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ORIGINAL POST:

Gideon/Flickr*

An imminent “withholding tax treaty”, will allow Germany to claw back some revenue from tax evasion, but it will also protect Swiss bank secrecy and undermine the prospect of automatic information exchange globally, and more specifically the EU European Savings Tax Directive (EUSTD).

Switzerland and Germany will conclude the deal on 10^th August, according to German and Swiss newspapers. A withholding tax will be charged on income from savings and investments of German citizens with Swiss accounts, i.e those who had previously evaded tax in Germany. There will be both a one-off payment for lost income in the past, paid initially by Swiss banks, and then an ongoing tax on interest and return on capital.  However, the withholding tax will be returned anonymously, thereby protecting Swiss banking secrecy.

The one-off compensation for past lost earnings could raise between €1.8 Billion and €10 billion according to different estimates, and will be paid for by Swiss banks initially, who will be reimbursed if Germany can make individuals pay up.

Actually obtaining the ongoing revenue is likely to be difficult as in many cases account holders can dodge these rules by moving money between Switzerland and other tax havens. Equally, the German government is probably being naïve in trusting the Swiss authorities and banks to collect taxes for them. Tax Research UK point out that Switzerland is a country that “has a proven record of facilitating crime, and being utterly indifferent to it. And that has consciously and deliberately withheld information from other governments for decades.”

Britain has been in negotiations with Switzerland for a similar deal, and other countries might well follow suit, with France and Spain currently considering it.

The actual tax rate has still to be finalised but it is likely to amount to around 25-26%. This is less than the EUSTD, and will therefore undermine the initiative. EUSTD requires member states except holdouts to automatically provide other members states with information, but this only applies to wealthy individuals’ interest income. For example, Holland would have to automatically provide France with the details of any interest paid by Dutch banks to French citizens. This interest would then be taxed at 35%, from which Holland would keep a quarter and France the rest. The Swiss-German treaty will strengthen the hand of holdouts Austria and Luxembourg, who also pay anonymous withholding taxes rather than sharing information. It seems Switzerland has been pursuing the withholding tax deals precisely because they undermine the EUSTD, and damage the prospects of other international automatic information exchange deals.

*Image Credit: Some rights reserved by malias

Sputnikcccp / Wikimedia*

The European presidency has just issued a note advocating a push to increase financial transparency in Europe through its Savings Tax Directive. As they say:

“The Presidency attaches crucial importance to gear up bilateral talks in order to reach political agreement upon the adoption of the Savings Tax Directive in the very near future.”

Unsurprisingly, there are some rather large flies in this ointment. Austria and Luxembourg have long been holdouts on the European Savings Tax Directive, working hard behind the scenes to spike progress on transparency. Instead of agreeing to automatic exchange of information for tax purposes, they offer only an anonymous withholding tax. This arrangement, as we have just argued, goes against the spirit of just payment of due taxes by European taxpayers, and against a drive towards cooperation amongst member states in acting not to deprive fellow EU members of revenue. Furthermore, the relevance of the European Savings Tax Directive goes beyond Europe: it could become the nucleus of a multilateral agreement on automatic tax information exchange.

The current legal situation in the European Union is that this transitory arrangement for these two countries would end once the European Union signs treaties with a few (nearby but non-EU) secrecy jurisdictions for information exchange upon request (Article 10, Council Directive 2003/48/EC). The largest of these is Switzerland, others are Andorra, Liechtenstein, Monaco and San Marino. Remember, we’re talking agreement by each of those non-EU jurisdictions with the full European Union.

The prospects for such agreements have increased since the G20 stated its intention to fight against banking secrecy, and Switzerland and a few others have been forced to remove their ultra-tight interpretations of OECD norms. But progress on negotiations with these few non-EU countries is being blocked within the European Council by Austria and Luxembourg. The reason, of course, is that if EU negotiations with Switzerland were to be successfully concluded (the other minnows would be expected to fall in line, if Switzerland did), their ability to preserve banking secrecy for EU countries would come to an end.

What can the Swiss do in order to prevent the unthinkable: an end to secrecy? They remember the Roman Empire’s strategy of divide et impera (divide and rule; see TJN Germany blog). Dividing Europe’s key members on the issue of tax transparency would help them to prevent the dreaded automatic information exchange from reaching its borders.

So Switzerland has offered money instead of transparency to certain powerful EU members through an anonymous final withholding tax – see our previous blog commentary on Swiss-UK-German tax deals: money, not transparency. Germany and the UK began negotiations late last year. If key major players in the EU are lured into such preferential treatment with Switzerland, their incentives to put their weight behind the EU fully engage with the EU for a level playing field on tax issues beyond the EU-member countries (in order to include Switzerland) would be reduced.

An EU-wide coalition is necessary if the EU is to bring enough pressure to bear on Switzerland to reduce secrecy – and this new Swiss initiative seems aimed at removing the resolve of its two most powerful members. Others are increasingly indicating interest in this issue. Italy issued a ferocious warning recently that such behaviour undermines a common EU position towards increasing tax transparency via automatic information exchange.

A few days ago, Austria started expressly using these ongoing bilateral negotiations by Switzerland with the UK and with Germany as an excuse to incur further delay within the European Council on progress on automatic information exchange (see TJN Germany blog, in German). Austria’s Finance Minister Pröll has said that bilateral agreements between EU member states and with Switzerland may result in an uneven playing field at the European level.

Austria seems to be creating a pretext for vetoing progress on getting the EU to negotiate with Switzerland. However, if the UK and Germany persist with negotiations on bilateral withholding tax agreements with Switzerland, they become complicit with Austria, Luxembourg and Switzerland: they will be presenting Austria and Luxembourg with the gift of a political opportunity to stall. While Austria’s and Switzerland’s newspapers report on this crucial subject, media in Germany and the UK have so far ignored this issue.

This political mess incurs a serious risk of derailing, or at least impeding, progress on tax justice within the EU. If the UK and Germany were interested in transparency and the welfare of their citizens and of those in Europe, they would publicly announce the end of their negotiations with Switzerland on an anonymous final withholding tax, and publicly call on Austria and Luxembourg to end their veto in the European Council.

Secrecy is entirely, utterly incompatible with the economic needs of Europe.

Further, and crucially, there is great risk here of missing an opportunity for the construction of a fully functional information exchange system that could be implemented with an increasing number of countries – for the good of the majority of this planet’s population.

Are the UK and Germany interested in this?

Originally published on the Tax Justice Network blog…

* Image license:  Some rights reserved by Sputnikcccp, from Wikimedia Commons

The German government may be about to step up its pursuit of tax evaders amid reports that a new CD containing stolen bank data has been offered for sale to state authorities.

Schleswig-Holstein, the most northerly of Germany’s 16 states, is in talks with an unidentified source to buy the CD containing details of “hundreds” of people with money hidden in a bank in Liechtenstein, the Sueddeutsche Zeitung reported today, without saying where it got the information. The data relates to accounts worth 500 million euros ($641 million) at Liechtensteinische Landesbank, the Munich-based newspaper said.

Read more…

Details of the meeting, including the final communiqué and the papers submitted by participants, who included Jo Marie Griesgraber from our partners, New Rules for Global Finance, and our Director, John Christensen, are available here.

Deutsche Bank AG, Commerzbank AG and Sal. Oppenheim Jr. & Cie. defended international activities after Die Zeit reported German lenders are “deeply involved” in business with tax havens.

The newspaper reported that German banks, through units in Liechtenstein and Switzerland, have business relationships with more than 1,600 foundations and trusts in tax havens, citing internal documents from the Finance Ministry.

Continue reading at Bloomberg.com…

The prince took aim particularly at Germany, which has been pressuring Liechtenstein to clamp down on confidential banking practices that it claims allow wealthy Germans to evade taxes.

“We and Switzerland saved many people, especially Jews, with banking secrecy,” Hans-Adam II told the Liechtensteiner Volksblatt. “Germany should clean up its own act, and think about its past.”

The prince noted how some Jews were able to buy their safety during the Holocaust by using money they had safely deposited in Switzerland or Liechtenstein. Secrecy rules also helped people persecuted by communist governments and “continues to save life … in Third-World countries run by bloodthirsty dictators,” he said.

This is a reckless argument. Aside from the fact that it’s almost never a good idea to invoke the Holocaust in support of your argument, banking secrecy was actually NOT created to protect Jews and other minorities from the Nazis. As Bruno Gurtner, Chair of the Global Board for Tax Justice Network, notes in his March letter to the Financial Times:

This is a big myth. The argument about [banking secrecy] being set up to protect Jewish money first appeared in the November 1966 Bulletin of the Schweizerische Kreditanstalt (today Credit Suisse). The main reason bank secrecy was strengthened in 1934 was a scandal two years earlier, when the Basler Handelsbank was caught in flagrante facilitating tax evasion by members of French high society, among them two bishops, several generals, and the owners of Le Figaro and Le Matin newspapers. Before that, there was professional secrecy (such as exists between doctors and their patients), and violation was a civil offence, not a criminal one as it is today. Swiss bank secrecy has always been an effective way to attract foreign money. (Bold emphasis is my own, italic emphasis is Gurtner’s)

Don’t believe Mr. Gurtner?  Many other news sources support this fact.  Take this Reuters article as an example:

But [Switzerland's] code of secrecy — which local myth inaccurately claims was introduced to protect fleeing Jews — is as controversial as it is protective.

The notion that banking secrecy was invented to protect the Jews from the Nazis is a myth, and to perpetuate this misconception is truly vile.  While banking secrecy was not, in fact, invented to protect the Jewish people, it is a fact that many Jews were able to hide their money in secret Swiss bank accounts.  But even this argument is a double-edged sword, as Swiss banking secrecy also acted as a conduit for Nazis to conceal their money from the outside world.  Moreover, many banks that did take money from Jews who were trying to hide from the Nazis later refused to give it back after the war.  I’m sorry, Prince Hans-Adam, but the moral high-ground belongs with those who wish to end banking secrecy.

But the Prince doesn’t just insult the Jewish people by stoking the memories of the Holocaust.  He then puts on his hypocrite hat and blames Germany for the financial crisis:

“Beyond that, Germany and many other countries have an unbelievable mess with their state finances,” Hans-Adam II said, referring to a traditional argument here that poor governance and high taxes lead to tax evasion, not banking secrecy. “These must first be put in order. They have been unsuccessful until now in doing this. The financial crash basically goes back to this alarming disability.”

It is impossible to deny that financial powerhouses like Germany, France, the UK, and the US made some poor decisions and share some responsibility for the financial crisis.  However, low-regulation, secrecy jurisdictions like Liechtenstein, the Isle of Man, Switzerland, the Cayman Islands, and many others played an incredibly significant — if not the most significant – role in the financial collapse.

The statements made by the Prince of Liechtenstein are those of a panicked person who sees the illicit financial system which brought him much personal wealth begin to slip away: they are the verbiage of desperation.  We’re making real progress.