Friday, October 31, 2008

Swiss In Fight With Germans (Again)

Life Imitates Art: War Declared on Switzerland
Last week, tax-hungry officials from the increasingly socialist countries of Germany and France declared another round in their long running war on Switzerland.
Their aim once again was against traditional Swiss bank secrecy, which the Franco-German politicians claim is little more than a cover for massive tax evasion. As usual, they didn't offer any proof for this claim.
Over several centuries and during two World Wars, peaceful Switzerland always has maintained its traditional neutrality. It's kept out of numerous wars involving both France and Germany, usually with the latter attacking the former.
The last time a war of sorts was declared against Switzerland was in George and Ira Geshwin's 1930 Broadway musical hit, Strike Up the Band. In the musical, the plot centered on a Babbitt-like American cheese tycoon who tries to maintain his monopoly on the U.S. market by convincing the United States government to declare war on Switzerland.
I suspect that the current effort by France and Germany will be just about as successful, (but much less entertaining), as Gershwin's spirited musical militarism.
Another Skirmish - Another Show!
Reacting to these renewed pressure from European Union officials, the Swiss government vehemently defended its tax system and its financial privacy.
This may look just like another episode in the decade-old, anti-Swiss political road show, but there's one new tactic. This time, EU cronies are using the current world economic disruptions as bogus proof that tax havens cause recessions! Please.
Tax-hungry politicians have repeatedly criticized Switzerland for its low taxation and banking secrecy laws. Biased critics claim that these laws provide European citizens with loopholes for evading taxes in their own countries.
Naturally, these anti-Swiss demagogues ignore the fact that Switzerland participates fully in the EU tax directive program. This means Swiss officials already collect taxes from foreign account holders and pay it to their home EU governments.
The most recent criticism coincides with a rapidly spreading global financial crisis that has prompted governments worldwide to spend billions of dollars to bailout ailing banks. With a recession looming in the U.S. and Europe, governments are grasping at any straw to stop a sharp fall in tax income.
Swiss Banks Don't Know the Meaning of the Word "Surrender"
Economists doubt, however, Switzerland will give up its banking secrecy or radically adjust its tax laws. They're saying the country is strong enough to defend itself against the EU's complaints. They note that Switzerland, as a member of the Organization for Economic Cooperation and Development (OECD), can effectively veto any decision by the OECD to blacklist it.
According to EU estimates, the world's tax havens, not including Switzerland, have attracted around US$5 trillion to US$7 trillion in assets because of low or nonexistent taxation. Swiss banks manage around US$4 trillion in assets, about 50% from foreign individuals and institutions.
At present, only three European countries (God bless them!) - Liechtenstein, Monaco and Andorra - are on the OECD's tax haven blacklist.

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