Wednesday, February 3, 2010

German Finance Minister Wolfgang Schaeuble said Tuesday that Germany would buy stolen information on secret Swiss bank accounts, a decision guaranteed to further sour deteriorating relations between Germany and Switzerland over tax evasion.

“In principle, the decision has been made,” said Mr. Schaeuble, who compared the opportunity to a 2008 case involving stolen data from Liechtenstein’s biggest bank, LGT. “Therefore, we could not decide any differently,” he told a German newspaper.

A whistleblower reportedly has offered to sell to German tax authorities the names and account information of 1,500 Germans who have secret Swiss bank accounts. The whistleblower’s asking price is reported to be nearly $3.5 million.

“We should aim to get hold of this data if it’s relevant,” German Chancellor Angela Merkel said Monday, declaring that Germany must crack down on tax evaders.

Swiss bankers and officials were fighting back with rhetorical flourishes.

“We expect the German government not to purchase the data and as such act as a receiver of stolen goods,” the SBA Swiss banking lobby said.

“Here we have a new form of bank robbery,” Swiss lawmaker Pirmin Bischof told a German public radio station. “Before, you had to go to the bank and get hold of the money with a weapon. Today, you can do it electronically by stealing data.”

German media estimate that the government recovered $278 million from more than 160 German tax evaders who had accounts with LGT. The government might recoup another $139 million from the 1,500 tax dodgers involved in the latest case, according to media estimates.

Speculating about which Swiss bank is involved has become a frenzy as various German publications have identified different Swiss banks as the whistleblower’s target, including UBS, Credit Suisse and HSBC’s private bank in Geneva.

“UBS does not know whether the information in question exists,” the Swiss bank told The Washington Times. “At this point that is speculation.”

Switzerland and the U.S. Justice Department reached an agreement in August that would require the Swiss to disclose to the Internal Revenue Service the names of 4,450 American clients of UBS who were suspected of evading U.S. taxes. However, a ruling by a Swiss court last month significantly limited the kind of information that the Swiss government could reveal to U.S. authorities. That court decision now threatens to unravel the August agreement.

With the U.S. budget deficit expected to approach $1.6 trillion this year, powerful members of Congress are losing patience with wealthy Americans whom they consider to be tax cheaters.

“At a time when too many hardworking Americans are struggling just to get by, it’s an outrage that an elite few are able to skirt their tax obligations by hiding money overseas,” Senate Finance Committee Chairman Max Baucus, Montana Democrat, told The Times. “This case is just one more example of the urgent need to strengthen our tax laws to provide the IRS with the necessary tools to combat these abuses or prevent them altogether.”

Mr. Baucus and others introduced legislation in October “to hold these individuals accountable by increasing the penalty for failing to report offshore accounts and providing strong incentives for foreign banks to report information about foreign accounts held by U.S. taxpayers,” he said.

President Obama included their proposals in his 2011 budget, which projects that cumulative budget deficits will exceed $10 trillion during the 2010-20 period.

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