Parliament has approved accords with Germany, Britain and Austria on taxing undeclared offshore assets in Swiss banks in a bid to stave off international pressure on banking secrecy.
Despite opposition by the rightwing Swiss People’s Party and parts of the centre-left, both chambers clearly voted in favour of the bilateral treaties aimed at regularising funds and introducing a withholding tax for account holders.
In two days of debate in the Senate and the House of Representatives, supporters mainly from the centre-right parties as well as most Greens supported a government proposal aimed at preserving Switzerland’s financial centre.
Speakers noted Switzerland had no other option and although the accords were far from perfect, they would help close the door on the past and provides options to deal with future challenges.
“The accords are good. They allow account holders to pay taxes without giving up their private sphere,” said Radical Party parliamentarian Ruedi Noser.
Other politicians made no secret that their approval was merely a choice of reason as the treaties had important loopholes and contained no guarantees that German banks, for example, were willing to adhere to the principle of not accepting untaxed assets.
Green Party Senator Luc Recordon said Switzerland was “in a tight spot” and could but accept the treaties while Christian Democrat Senator Pirmin Bischof appealed for a factual approach and less emotion in the debate. He said the accord might even become a blueprint for a similar treaty with the European Union.
Supporters said the withholding tax was a viable option to fend off the introduction of the automatic exchange of bank data, demanded by the EU and supported by Switzerland’s centre-left.
Dangers and risks
Resistance to the accords came from opposite ends of the political spectrum. While the People’s Party argued the treaties, - notably with Germany and Britain – were poorly negotiated, the centre-left Social Democrats were divided as to whether the treaties were no more than another excuse to cling to banking secrecy.
People’s Party strongman Christoph Blocher lashed out at both the government and bankers, saying the treaties were “intolerable and disgraceful”. He said the accords would weaken Switzerland’s financial industry and destroy many jobs.
He dismissed allegations that Switzerland had no choice but to accept the accords. His party colleague Hans Kaufmann argued the accords amounted to a “humiliation of a sovereign state”. The party called for new negotiations and better terms for Switzerland.
Social Democrat Susanne Leutenegger Oberholzer categorically refused to back treaties which allegedly left loopholes for tax cheats and fell short of introducing an automatic exchange of information on account holders between partner states.
“Untaxed assets are a danger for Switzerland because the country is subject to political blackmail,” she warned.
Turn the page
Finance Minister Eveline Widmer-Schlulmpf told both houses in Tuesday and Wednesday’s debates that the treaties would help forget the past.
“The withholding tax allows to regularise the past correctly in order to maintain the private sphere of account holders and ensure that banking secrecy is not used to evade taxes,” she said.
Widmer-Schlumpf added that there was a general consensus that Switzerland could not continue to be a safe haven for tax cheats. She said other European countries, keen to crack down on tax evaders and boost their revenue in times of economic crisis, were watching Switzerland closely.
But she refused to commit herself as to how long the treaties would block foreign demands for the introduction of an automatic exchange of information on assets.
In the Senate debate she also hinted that the accords could serve as models for a wider agreement with the 27-nation EU.
However, as the House of Representatives rejected a legal amendment to apply the measures the bill will return to the Senate for discussions.
The conservative group, Campaign for an Independent and Neutral Switzerland, which is close to the People’s Party, was considering whether to challenge the treaties in a nationwide vote. In a statement, it said it would decide at the end of the three-week summer session.
It will have to collect at least 50,000 signatures within 90 days to force a referendum. The centre-left Social Democrats said they could support such a move.
The parliaments in the other three countries still have to ratify the respective treaties, amid threats by the political opposition parties, notably in Germany, to throw them out. The accords are due to come into force by the beginning of 2013.
The three bilateral accords with Germany, Britain and Austria are the first of their kind with member states of the European Union.
They are scheduled to come into effect at the beginning of January 2013.
The three deals, with slightly different terms, were agreed by the respective governments in March and April.
However, the deals are still subject to approval by the parliaments in the three countries.
Deals with other EU member countries, notably Italy and Greece, are planned despite Brussels pressure to introduce an automatic exchange of banking data.
However, non-EU member Switzerland wants to maintain its banking secrecy rules.end of infobox
The EU has publicly approved the tax treaties but the OECD earlier this week expressed concern about the implementation of the accords.
In 2005 an agreement came into force between the EU and Switzerland imposing a withholding tax on interest for Swiss bank accounts belonging to EU citizens.
The proceeds of the withholding tax amounted to SFr506 million ($527 million) according to latest figures published by the finance ministry last week.
Switzerland is also seeking a tax deal with Washington amid threats of legal battles with individual Swiss banks over access to data of US citizens.end of infobox