«We’ll all reach H(e)aven…»

Article published on April 7, 2009
Article published on April 7, 2009
Is there one portfolio that hasn’t imagined landing in Monaco, Andorra, Liechtenstein, Switzerland, Jersey, Guernsey… ? Which 6 digits account has not dreamt of a comfortable nest in a tax haven?

"Tax haven" written in French on the back of demonstrators on the Island of Jersey

Focus on a dark side of liberal capitalism

Once a primary destination for European and international fortunes, these peaceful havens seem to have become less attractive to liberal capitalism ideologists. Entrepreneurs, banks or holdings managers, etc. were until very recently considered icons of capitalistic success. But their lack of civic behaviour in relation to tax evasion is less and less appreciated in these times of crisis. Once considered the ultimate success for capitals filled with pride and prejudice, pretending that ‘the State was only good for taxing’, tax evasion now suffers from financial moralization. The State is indeed just good for taxing, but in times of financial crisis when public funds are in peril, this would almost become virtuous.

Tougher Stance for big fortunes and their hosts

The opacity of tax havens is one symbol of liberal capitalism which creates tensions. These tensions are now reaching the higher spheres of the State. The major European decision makers are maybe afraid to be fleeced by the top executive managers with whom, once upon a time, they used to be friends with. Could that explain that tougher measures be taken: the end of golden parachutes, renouncing indemnities, three thirds policy…And recently, François Fillon’s plan aiming at ending the principle of stock-options for public and partly state funded companies. In light of this, and in order to remain coherent with a policy which intends to put an end to privileges, international sanctions are called for against offshore accounts and banking secret.

Exchange of good practices at the European level

The French Ministry of Finance has recently seriously considered the midway solution adopted by Ireland in 2004 consisting of a ‘regularization desk’ where the fiscal evader won’t avoid tax adjustment but may avoid legal pursuits. This system allowed Ireland (3 billions inhabitants) to recover one billion euros in taxes. According to Daniel Labègue, President of Transparency International France, “The only thing that was missing was the political will, that of the European”. It seems that Europe and its “tax havens black list”, through the OECD, has the will to react firmly. Leading the way, OECD seems to have convinced the major 6 tax evaders’ hosts (Switzerland, Liechtenstein, Andorra, Austria, Luxembourg and Monaco) to modify their habits with regards to banking secret. The top 20 richest countries in the world are thus gathering in London in an attempt to rule out international finance.

Is it a political coup in an international environment in turmoil or the premise to a genuine trans-national action plan? Time will tell…

Picture copyright : Finnish Eye/FlickR

Translation : Frédérique Destribats

Sophie Helbert