Tax evasion, bank secrecy: G8 talks tough, seeks teeth

Tax evasion, bank secrecy: G8 talks tough, seeks teeth

PARIS - Tax evasion and banking secrecy, hot topics and top targets because of the financial crises and austerity, could be the focus of strong statements at the G8 meeting this week.

The British government, organising the meeting in Northern Ireland, has promised big developments on the basis of substantial progress recently in clamping down on evasion and bursting bank secrecy.

But many observers from civic bodies are pessimistic and say that the summit on Monday and Tuesday will amount to a lost opportunity despite the public outrage over recent brazen cases at a time of tax rises and budget cuts.

The tightening up of tax systems across borders, and opening up information on how businesses do their accounting across borders, are two of the burning issues for Britain which is currently chairing the G8 (Group of Eight) leading countries.

The G8 comprises the United States, Japan, Germany, France, Canada, Britain, Italy and Russia.

British Prime Minister David Cameron has prepared the way for the summit of heads and state and government by stating the "ambition" that the meeting at Lough Erne will "knock down the walls of banking secrecy" with "concrete measures".

French President Francois Hollande, badly bruised by a recent scandal involving an admission by his budget minister Jerome Cahuzac, also responsible for fighting tax evasion, that he had hidden money abroad, has said: "Tax havens must be eradicated in Europe and throughout the world." The climate has turned strongly in favour of tough action: pressure on these two fronts, which seemed to have eased after progress in 2009, is again at a high pitch.

First, a new law in the United States, called Fatca, obliges all banks to provide US authorities with all information they hold concerning all assets owned by US taxpayers.

Meanwhile, revelations by journalists, known as "Offshore Leaks", have further strengthened the perception that no bank account can be considered secret and that hidden funds are liable to exposure.

The consequence of this is that the gates of some strongholds of banking secrecy, such as Switzerland, are beginning to give way.

The European Union, in which some countries have arrangements considered favourable to those seeking to dissimulate funds, seems to be overcoming internal divisions and trying to catch up with the United States, even though Austria and Luxembourg still show some reticence.

The G8 leaders are expected to make strong statements calling for a "truly global system of multinational information exchange", according to a draft final statement. But concrete measures appear unlikely.

Cameron has opened a second front to combat strategies by multinational companies to avoid paying tax via transfer pricing and other techniques to generate costs in high-tax countries and profits in low-tax countries or tax havens.

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