We are by now used to hearing rhetoric about “pledges” to end bank secrecy and an end to tax havens, as if forcing another country to change its legal code were a natural course of action.
But what do the so-called tax havens think about all this? Here’s an interesting article from Uruguayan newspaper El Pais (Uruguay was one of the 4 countries originally placed on an OECD “blacklist”). The author, respected Uruguayan economist Ignacio De Posadas, makes the case for Uruguay keeping it’s bank secrecy law. Now of course he cannot speak for a country of 3 million people, but its revealing nonetheless to hear their story, not often represented in the Western press. The article is written article in Spanish; here are some of his arguments in translation.
– The issue isn’t about when people use bank secrecy to commit serious crimes, nobody disputes that.
– Uruguay doesn’t have any obligation to enforce the collection of French or British taxes (nor would those countries give them anything in return).
– What right do “powerful” countries have to pressure smaller countries into changing their internal laws – an action which will benefit the more powerful and result in a loss for the smaller country?
– The OECD text says that tax havens should bring themselves in line with “international standards” for tax-information sharing, as if it were a UN convention or some other multilateral agreement signed by Uruguay, when really it’s an OECD convention, of which Uruguay is not a member and has nothing to do with.
– Why are they doing this? Because over several decades OECD countries have been expanding and complicating their systems of taxation – out of all proportion with the return these administrations give to taxpayers. In other words – it’s their problem. What does Uruguay have to do with it?
– How does bank secrecy benefit Uruguay? In reality the question isn’t being put in the right way. Bank secrecy is consecrated in the constitution. Of course there are limits and norms to bank secrecy, but these aren’t pre-requisites. In other words..it doesn’t matter if it benefits Uruguay or not, it’s a right. Full stop.
The war on tax havens is about strong and powerful countries using force to impose themselves on smaller nation states. There are no guns but the principle is the same.
More on bank secrecy.