Finance ministers from Germany, France, the U.K., Italy, Spain and Poland held a joint press conference today in Dublin calling for the 27-nation bloc to adopt the FATCA information exchange program. Austria’s Maria Fekter earlier criticized the U.K. for protecting “money-laundering paradises” and said France backed down from threats to blacklist Austria.
The message to anyone avoiding tax is that “the places you can hide are getting smaller and smaller and fewer and fewer” Chancellor of the Exchequer George Osborne said at the joint press conference, which followed a meeting of the EU finance ministers. “There is real momentum to tackle this problem of tax evasion.”
The push to crack-down on tax evasion comes as many European nations struggle to narrow budget deficits in the face of stalled growth and a regional debt crisis. Politics is also spurring the initiative, notably in France, where President Francois Hollande’s popularity has slumped after his budget minister resigned and admitted having an offshore bank account following months of denials.
“We want to create momentum, the political force to make this happen,” French Finance Minister Pierre Moscovici said earlier. “This initiative has a moral aspect, but it should have an impact on tax revenues too.”
Savings Directive
Germany’s Wolfgang Schaeuble said the EU’s savings directive should be enlarged to include all forms of capital income and that European countries should bring the proposals to the Group of 20 nations.
EU Tax Commissioner Algirdas Semeta has urged countries to press ahead with current proposals to clamp down on tax evasion rather than switch to new proposals. He maintains that an updated EU savings tax accord, which has been on hold because of objections from Luxembourg and Austria, would bring together 27 countries rather than the handful which have signed on to the new initiative so far.
Moscovici noted that Luxembourg is preparing to ease its bank secrecy rules by 2015 after having joined Austria in vetoing previous EU proposals to share more data among tax authorities.
“What we have achieved is the result of a long thinking process,” Luxembourg Finance Minister Luc Frieden said today. “It is a strategy of growth which will encourage long-term financing,” he said. “We want to have a level playing field.”
‘Non-cooperative Nation’
That leaves Austria under increased pressure. Austrian banks risk a backlash unless the country cooperates with the initiative, French Budget Minister Bernard Cazeneuve, who replaced Jerome Cahuzac this month, said yesterday. Austria “risks being listed as a non-cooperative nation,” he said.
Fekter suggested Moscovici attenuated that suggestion today. “Finance Minister Pierre Moscovici approached me and made it clear that his colleague, who has only been in his job for 15 days, didn’t really mean it when he spoke of putting Austria on a black list,” Fekter told reporters.
Moscovici said that he gave Fekter “precisions” on French plans, though he is in “complete” agreement with Cazeneuve and that France won’t hesitate to blacklist any country that doesn’t participate.
The discussion on bank secrecy in Austria takes place in an election year in that country. The conservative People’s Party opposes an automatic exchange of all data, saying it wants to protect the privacy of small depositors. The party, to which Fekter belongs, has called for a legal review over whether information on foreign account holders can be exchanged.
‘Money-Laundering Paradises’
“Austria stands by bank secrecy but we’re also fighting tax evasion and money laundering,” Fekter said. She also charged the U.K. with harboring “money laundering paradises” such as the Cayman Islands by failing to properly exercise its legal authority.
“The U.K. especially has a plethora of money-laundering paradises and tax havens in its immediate area of legal responsibility -- the Channel Islands, Gibraltar, Cayman Islands, Virgin Islands,” she said. “These are all hot spots for tax avoidance and money laundering.”
Osborne responded today by noting that his government has already concluded agreements on automatic information exchange with the Channel Islands and is in talks with overseas territories such as the Cayman Islands about doing the same.
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