Austria defies pressure to end bank secrecy

Reuters, DUBLIN

Mon, Apr 15, 2013 - Page 15

Austria defied growing pressure to follow Luxembourg in ending bank secrecy, after a group led by Europe’s six biggest countries pledged to work together to tackle tax havens.

Late on Friday, the finance ministers of Germany, France, Britain, Italy, Spain and Poland announced their desire to jointly push for more bank transparency, a message they will take to the meeting of the G20 top global economies in Washington this week.

“Nobody can deny that bank secrecy is outdated, that we need an efficient system to tackle evasion strategies,” French Finance Minister Pierre Moscovici told reporters, flanked by his counterparts from the other countries.

“Our mission is to create momentum. When these six major capitals of Europe move together, it creates a strong signal which nobody can resist,” he added.

On Saturday, three other countries — Belgium, the Netherlands and Romania — joined the initiative, the European Commission’s official in charge of tax policy, Algirdas Semeta, said.

“It’s about allowing member states to make the right tax choices for them without being affected by the malpractices of others,” Semeta told journalists on the sidelines of an EU ministers’ meeting. “In a nutshell, it’s about fairness.”

Polish Finance Minister Jacek Rostowski told reporters that he joined the group to ensure foreign multinationals do not abuse tax regimes for profit. Such companies are particularly important for central and eastern Europe.

“The scale of the problem is smaller in Poland than in western Europe, but some of the techniques used in western Europe to evade taxes are being transferred to Poland too,” Rostowski said.

“Citizens must have full confidence that the system is not being abused to evade taxes or for simply for tax fraud,” he said. “The fight with tax fraud will be all the more effective if it is conducted on a European and even global level — that’s why we joined.”

Announcing the cooperation, British Chancellor of the Exchequer George Osborne said he was pushing for more transparency from the UK overseas territories of the Cayman Islands and British Virgin Islands.

The announcement adds to pressure on Vienna to sign up to EU rules for the automatic exchange of information on bank depositors.

It follows Luxembourg’s decision last week to share foreign bank account details with EU governments from 2015, bringing it into line with all other member states bar one — Austria.

However, Austrian Finance Minister Maria Fekter stuck to her earlier position, dismissing such an exchange of information as an invasion of privacy.

“We will fight for bank secrecy. We are no tax haven,” Fekter told reporters, placing her country in a minority of one during discussions on the issue among 27 EU ministers.

She defended Austria’s practice of imposing tax on interest paid to foreign savers, money collected and returned to their home country’s government — but with no names attached. The EU wants information about accounts to be given.

“Our neighbors get their fair tax delivered,” she said, claiming that any automatic exchange of information would lead to an overload of data that would not be used.

“It’s much more sensible to deliver the money rather than a graveyard of data,” she said. “That brings more money quicker into the tax coffers and is genuinely tackling tax evasion.”

She had earlier attacked the G20 top economies for not taking what she branded centers of money laundering such as the Cayman Islands, Virgin Islands or Delaware.

Confidentiality is so cherished in Austria that banking secrecy, which has deep traditional roots, is anchored in the constitution.

However, Fekter faces a difficult fight. Tax evasion deprives EU governments of roughly 1 trillion euros (US$1.3 trillion) annually. France, in particular, wants to underscore its determination to tackle tax fraud.