Excerpts from the opening:
Buffeted by a political scandal, a stagnant economy and angry public reaction to a report about secret offshore bank accounts, President François Hollande of France announced the creation of a special prosecutor Wednesday to pursue cases of corruption and tax fraud and vowed to eradicate tax havens “in Europe and the world.”
As he spoke, one of those tax havens, Luxembourg, said it would bow to pressure from its European allies and begin forwarding the details of its foreign clients to their home governments. Luxembourg, with only half a million people and a banking sector more than 20 times larger than its gross domestic product, is one of Europe’s largest financial centers and has been compared to Cyprus, a fellow member of the euro zone that had a huge banking sector fueled by foreign money.
The announcement from Luxembourg came a day after the five European countries with the biggest economies — France, Britain, Germany, Italy and Spain — agreed to exchange banking data and create their own automatic tax data exchange, one modeled on the U.S. Foreign Account Tax Compliance Act, passed by Congress in 2010 to try to track down the overseas assets of Americans who might be dodging taxes.
The European governments said they hoped the information exchange would not only “help in catching and deterring tax evaders” but also provide “a template” for a wider multilateral agreement. In a joint letter released Tuesday, they urged the European Union commissioner responsible for taxation, Algirdas Semeta, to work to get all 27 E.U. member states to sign up.
The announcements come a week after the publication of an exposé by a Washington-based group, the International Consortium of Investigative Journalists, into the assets held in overseas tax havens. The report, which centered on the Caribbean, and especially the British Virgin Islands and the Cayman Islands, also embarrassed European governments, including Luxembourg, by showing how wealthy citizens routinely hide assets, sometimes legally and sometimes not, and avoid paying taxes by setting up offshore companies.
The report has set off something of a scramble to calm public anger over widespread tax dodging by the rich at a time when governments are cutting their budgets and calling on citizens to pay higher taxes.And you can read the rest.
I think these countries owe Birkenfeld at least a thanks, if not some monetary award.