News of the terms of the Swiss tax deal with the UK has emerged on the back of coordinated press releases from the Swiss and UK authorities.
It is predicted the UK will receive a sum estimated at around £5bn from non disclosed bank accounts derived from initial lump sum payments based on tax rates between 19% and 34%. Thereafter ongoing income will be taxed at rates varying between 27% upto 48% depending on the type of gain or income.
The Swiss have retained their banking secrecy such that clients will be subject to these taxes but not have to disclose their identity to the UK authorities. Those that don't want to comply with the arrangement will have to leave.
Some commentators will argue the deal is too soft although the tax rates ongoing are virtually in line with the highest rates of tax levied in the UK and likely to be signifcantly higher than the Lichtenstein agreement put in place by the previous Labour administration. Clearly proponents of the European Savings Directive being extended and enlarged will be disappointed at this deal, and the bi lateral agreement with Germany, which effectively overtake those arrangements.
The reality is that the surrender of banking secrecy would have required a Swiss referendum which would likely not have been carried leaving the whole issue at an impasse. Pragmatism has won the day and £5bn if achieved will be a welcome addition to the cash strapped UK exchequer, battling to bring down a deficit of circa £165bn and a national debt burden approaching £950bn built up over the last 15 years.
The whole initiative brings into focus the very different approach to transparency operated by Jersey. We have no banking secrecy laws to impede the sharing of information and have been a leader in the OECDs programme of information exchange. Whilst we respect the legitimate rights of every individual citizen to privacy which is enshrined in our common law, we will share information relevant to the tax affairs of individuals through tax information exchange agreements in appropriate circumstances. This applies not only to bank accounts but to all arrangements including trusts and companies, a feature not present in the Swiss agreement.
Some have speculated as to where non disclosed funds might flee. It certainly won't be Jersey where such funds would be unwelcome and where tax evasion has been a crime since 1999, a jurisdiction where finance workers have a legal obligation to report suspicious transactions.
If nothing else it can be hoped that these measures will bring closure to the matter so that governments and policy makers can focus on the much more fundamental issues of economic recovery, stability, and job creation, which ultimately will be the means of returning to more prosperous times.