It's beginning of the end for tax havens, says Brown
LONDON (Bloomberg) — UK Prime Minister Gordon Brown and German Chancellor Angela Merkel stepped up calls for tougher rules on tax havens after Switzerland and Liechtenstein agreed to soften banking secrecy rules.
"All jurisdictions must come within the rules," Brown said today at a press conference in London with Merkel. "Standards that are being applied in some jurisdictions are too low. This is the beginning of the end of tax havens, and that is good news for everyone."
The push against offshore banking centres is targeted at G- 20 negotiators who are revising rules in the wake of the financial crisis. Finance ministers from the group, which includes the US, China and nations from every continent, today said they will list states that don't cooperate. G-20 leaders will ratify the plan in London on April 2.
"We're seeing that the pressure alone to make a list of tax havens has already led to important positive steps," Merkel said on Saturday.
Switzerland, Liechtenstein, Andorra and Monaco this week all pledged to meet demands to bring their banking laws in line with international standards in a bid to prevent changes being imposed on them. Bermuda already has a tax information exchange agreement with the UK, as well as the US.
"Who would have imagined that because of the determination of some G-20 nations that we'd have triggered such a coming out" of the tax havens, French Finance Minister Christine Lagarde told journalists after meeting with her counterparts in Horsham, England.
Liechtenstein became the focus of European attention last year when Germany used bank data purchased from a former employee of LGT Group, the bank owned by the ruling family.
The data cost up to 5 million euros ($6.3 million) and gave German investigators details they needed to open a tax-evasion probe of some 900 suspects, including former Deutsche Post AG Chief Executive Klaus Zumwinkel.
Crown Prince Alois, who rules the country as the heir to the princely seat, called the investigation an "attack" on Liechtenstein at the time.
In the UK, the calls to contain offshore tax centers grew louder after Iceland's Kaupthing Bank failed in October, making it unable to repay about $1.3 billion in deposits held in its unit on the Isle of Man, an offshore banking centre.
That revelation triggered a spat with the UK over which government should be responsible for guaranteeing those accounts. The episode coincided with mounting public anger about the crisis in London's financial district.
Since then, Brown's government has concluded information-sharing agreements with banking centres that are dependent on the UK government for defence and foreign policy matters. The most recent accord, with Jersey, was announced last week.
