Nov 03 2011

TJN’s UK-Swiss tax analysis stands rock solid

Posted by: Nick Shaxson in: Thoughts

I sent this letter to the Financial Times on Monday, in response to Vanessa Houlder’s article about our widely reported analysis of the UK-Swiss tax deal, but they have now told us that it won’t make it into their crowded letters page. I reproduce the letter below. In summary, I think this letter shows that our analysis is watertight. Nobody anywhere has identified a single specific fault.

Sir,

In her article about our report on the loophole-riddled UK-Swiss tax deal, Vanessa Houlder asserts that much of the disagreement over the merits of the deal revolves around the likelihood of Switzerland ever providing automatic exchange of information with other countries. People may argue about that, but our report hinges on no such thing.

She quotes Bill Dodwell of Deloitte as saying some of our concerns are ‘exaggerated and unfounded.’ I have now had some correspondence [supplied to FT editors] with him but he has not rebutted anything specific in our report, saying merely that he trusts HMRC and suggesting that our analysis rests on Switzerland opening up. He also claims that revenue projections from the separate Liechtenstein Disclosure Facility back up his case. Why he thinks data from the (very different, and much tighter) agreement with Liechtenstein should be a better guide to expected future Swiss revenues than the relevant Swiss historical data – which are the basis for our calculations – is a complete mystery.

Greece and several other countries are considering copying this fatally flawed Swiss model – thus entrenching secrecy while raising next to no revenue. This issue is clearly of vast importance to beleaguered taxpayers in Europe and elsewhere – and our report should not be dismissed with casual and unfounded remarks. Nobody, anywhere has provided a substantive and credible rebuttal of a single point in our report. Your expert readers are invited to have a go. It’s on our website.

Nicholas Shaxson
Tax Justice Network; author of Treasure Islands: Tax Havens and the Men Who Stole the World

Interested readers can contact us if they want to see Dodwell’s comments, which he kindly gave us permission to publish.

By the way, while the report itself may look a little daunting, even someone with absolutely no knowledge of the subject should be able to understand some or all of the concepts of some of the games that are played by rich people in order to dodge tax, explained in Section 3. If you have a moment, it’s well worth reading that section, as you can learn a whole lot (as I did researching it.)

6 comments so far

Alien Edouard 11rd November, 2011 2.18 pm

“Nobody, anywhere has provided a substantive and credible rebuttal of a single point in our report. Your expert readers are invited to have a go…”

Nick – has it ever occured to you that the reason nobody is trying to provide a rebuttal is that, well, nobody cares…. You wrote a good report but barely any news organization picked it up in great detail.

This deal is done. the EU is even recommending that Greece concludes a similar deal Switzerland (http://www.ftd.de/politik/europa/:griechenland-krise-schweiz-soll-griechen-geld-ausliefern/60117780.html).

Time to move on.

Nick Shaxson 11th November, 2011 10.03 am

‘Barely any news organisation picked it up.’ Well, apart from the Financial Times, the Guardian, the Telegraph, Bloomberg, and a few others – each of which gave it full length stories – then I suppose you’re right. Where do you get your news from, just out of interest?

Alien Edouard 11rd November, 2011 2.50 pm

There is something in your logic that remains mysterious. You consistently assume that the bilateral German-Swiss treaty and the EUSD revision are somehow mutually exclusive, that we can have one but not the other.

Why do think this?

Switzerland has consistently said that it might be prepared to accept some revisions to the current agreement with the EU that replicates some of the terms of the EUSD. That has not changed post-Rubik. It is perfectly concievable for Switzerland to accept some the terms of the EUSD revision (except of course automatic exchange) and that would deal with many of the loopholes in section 3 of your report.

Nick Shaxson 11th November, 2011 10.00 am

I don’t actually think that. They aren’t obviously mutually exclusive, at least from an initial technical point of view. The fact is, though, that the signature of these deals has, as one newspaper headline has it, created ‘havoc’ in the EU. You get all the recalcitrant jurisdictions like Luxembourg saying ‘well, if they’re doing that, then we are damned well not going to accept further progress.’ Politically, they are a disaster.

Alien Edouard 11th November, 2011 1.35 pm

Nick – you are right actually, some major news organizations did pick up the story, but none is interested in following up on it (otherwise your letter would have made it into the dedicated FT section). The timing of the report was unlucky.

In the medium term, Rubik will actually be seen as the moment when the current gridlock around the EUSD revision has been broken. This is because Rubik definitely takes automatic exchange off the agenda, which will put immense pressure on Luxembourg and Austria to come back to the negotiating table.

Nick Shaxson 11th November, 2011 6.48 am

Oh, and there was also the small matter of the Today programme, which is the top political reference of them all, at least for domestic politics. And as regards your analysis of Rubik, I’m not sure where you are getting your information from but it certainly doesn’t chime with what I’ve heard.
By the way, it seems that you are a supporter of the Rubik deals, but haven’t said so in as many words. Are you concerned that Rubik will raise next to no revenue, and cement secrecy? If not, why not?

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