Nov 23 2012

A Swiss spanner in the transparency works: my Guardian article

Posted by: Nicholas Shaxson in: Thoughts

My article in The Guardian today. It starts like this:

“The world is seeing the first stirrings of an emerging new architecture of global transparency in taxation which could, if pushed forwards, help governments for the first time raise serious revenues from the estimated $21-32 trillion sitting offshore. Switzerland, in alliance with the tax havens of Luxembourg, Austria and Britain, is leading the charge to derail it.”

The headline isn’t mine: it isn’t ‘a scheme’ but several, and I wish it had said “tap” or some other short word instead of “net” (though who knows? Perhaps over the long term, trillions may have accumulate). There is also a slight error which is mine: I wish I’d inserted the two words in bold into this sentence:

The Swiss Bankers’ Association, which designed Rubik, has explicitly admitted that its original purpose was “to prevent” automatic information exchange: in other words, to kill progress on the European Savings Tax Directive. (the Directive is already up and running: Rubik’s aim is to kill the amendments to plug its loopholes.)

But overall, I’m very happy.

PS some commenters under the article are outraged that I live in . . . . Switzerland. Yes I do: in Zurich. And the reasons are here. (I’m not sure why it’s a problem for me to be living here rather than, say, the tax haven of the UK. I reckon I pay a similar whack in taxes here as I would in the UK, though I’ve never done a detailed analysis.) I always feel that if you’re going to write about something, then it helps to be where the action is.

3 comments so far

La Chupacabra 11rd November, 2012 5.51 pm

Nick –

You do not pay nearly the same amount of taxes in Zurich as you would in the UK.

The higher marginal rates of income tax is below 40% in Zurich (incl. Federal and local taxes), vs. 50% in the UK. And all tax rates kick in at much higher income thresholds in Switzerland than in the UK. There is no Swiss equivalent of a UK council tax. There is also barely any capital gains tax, and VAT in Switzerland is 6%, versus 20% in the UK.

It is basic mathematics: Government revenues as a share of GDP is over 40% versus 30% in Switzerland. Somebody has to pay for that difference.

There is nothing wrong whatsoever with you living in Zurich. Lower taxes, superior quality life, what’s not to like? Without trying too hard, you have become a perfect example of tax arbitraguer, and a role model for people who believe that a healthy dose of jursidictional tax competition is a good thing.

The problem is when you get your facts so wrong that one is left with one two possible conclusions: you are either very ignorant, or you think your readers are very stupid.

Nicholas Shaxson 11th November, 2012 10.48 am

Actually, I stand by what I said. I wouldn’t pay the top rate of tax in the UK: nowhere even close. I actually don’t know what my effective UK tax rate would be, and it may be that my Swiss effective rate is somewhat lower than what I’d pay in the UK – but if so, it would not be much. No need to fling around the insults.

Germany rejects Swiss tax deal, TJN slams UK 11th November, 2012 8.54 am

[…] Swiss politicians are putting a brave face on this, and still holding out hope for a route through to a deal. Commentary on Shaxson’s article is here. […]

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