For a decriminalization of tax law
The head of state of Liechtenstein accused Germany of having “attacked its sovereignty” by accepting that its secret services pay an informant to transmit Liechtenstein banking data to them. “For us, such a thing would be unthinkable. We do not place tax interests above the principles of the rule of law.” “We categorically reject the way the German government is proceeding,” added Klaus Tschütscher, deputy head of the Liechtenstein government and minister of justice. “The laws of the Principality would prohibit such a step.” This is why the Liechtenstein courts have opened an investigation against an unknown person for violation of corporate secrecy for the benefit of foreigners. Liechtenstein also believes that it does not need to reform its banking system. Since the 2000s, its officials believe they have taken the necessary measures against money laundering and organized crime. The documents delivered by the informant triggered one of the biggest tax fraud scandals in Germany. German justice is investigating a good thousand rich taxpayers, suspected of having hidden funds in Liechtenstein to escape the tax authorities. The explosive data comes from a confidential list stolen in 2002 from the LGT bank, owned by the princely house of Liechtenstein, by one of its employees. (Le Temps, 02/18/2008).
Several elements are striking in this case.
1, The State of Liechtenstein rightly accuses the German government of violating its sovereignty. But the involvement of German secret services poses other problems. Have these services exceeded their constitutional mandate? Yes, if they provoked the denunciation. No, if they only served as an intermediary between an anonymous informant and justice. Secret service officials, before a Bundestag supervisory committee, assured that they had never previously had contact with the spy. Which is very implausible… especially since they purchased this information for an amount of 4 to 5 million euros.
2, If the tax actions of the German government were governed by common law, they would fall under nefarious qualifications. The use of espionage, corruption, violations of privacy, home invasions with break-ins via police searches, if they were not the work of a State which exempts itself from its responsibility, would be considered criminal acts and punished as such.
3, There is no reciprocity in this matter since questions relating to tax evasion are dealt with under criminal law. This shows that legality is only the guise of force. Since there is neither reciprocity nor limits, when will the debt prison be reinstated, as under the Ancien Régime? Resistance to tax pressure is also subject to moral stigma. It is described as “fraud” or even a “sin” (Sünde)… In a recent study and quite ridiculously, the OECD considered tax evasion to be an evil in the first place. This shows the degree of subjectivity in “economic science”, especially when it is manipulated by an organization that emanates from governments.
4, The demagoguery of political parties in electoral competition leads them to demand increased interventionism. The Social Democrats have called for severity in cases of serious tax fraud, demanding prison sentences rather than fines! A speech shared by the CDU and Die Linke. The latter party, which is on the rise and continues to denounce the growing gap between a class of super-rich and the rest of Germans, hoped to garner votes in the Hamburg regional election thanks to this scandal.
5. However, pitting financial “elites” against normal citizens is in this case a false trial. Overall, normal citizens hide much more than the rich. It has been estimated that two thirds of Germans do not declare their benefits in kind or undeclared work. A Bild-am-Sonntag survey shows that it is from a monthly income of 2,500 euros that Germans begin to no longer declare their entire income (this is what 19% of respondents indicate, a figure undoubtedly lower than reality) – that is to say from the approximate amount where these citizens begin to have an income which would be available if the tax authorities did not strip them of it.
6, This confirms that the tax pressure is poorly supported. That would be 400 billion – one and a half times the state budget – which would escape German taxation abroad. The amnesty launched in 2004 failed: of the 6 billion euros hoped for in return, only 1.4 billion came back.
7, The German case is symptomatic of a broader context. Since the Treaties of Maastricht and Amsterdam, the European Union has continued to use the new integrated state instruments it has adopted to reduce financial freedoms. When it comes to banking secrecy, not only Lichtenstein but Belgium, Luxembourg and Switzerland have had to show a white hand. With each new rule, we go a little further outside the sphere of application of banking secrecy. Since 01.01.2008, a new regulation from the FATF/FATF, an intergovernmental body responsible for combating money laundering, requires banks to indicate the name and account number of those ordering international transfers. The desired objective is not really to fight against money laundering, but to facilitate the control of tax evasion.
8, The low level of citizen trust in governments, combined with high taxes, leads to tax evasion and the underground economy. It is there, and nowhere else, that we must look for the root of the problem. It is not by undermining freedoms and the rule of law that we can resolve this question, but by openly debating the balance between the cost of the State and the services it provides.