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Call for justice

Henrik Böhme / sms
April 6, 2013

Honest taxpayers are outraged over a global network established for the wealthy to evade taxes. But until politicians finally take action, nothing will change the status quo, says DW's Henrik Böhme.


Cut back to London four years ago: the second world financial summit after the Lehman bankruptcy and the ensuing near meltdown of the global financial system. The 20 most important industrialized and emerging nations agreed to a massive rescue package to prevent such a crisis from happening again. Part of the package was the fight against tax havens. Although they were not really closely connected to the financial crisis, leaders took advantage of the dynamics of the moment finally to take steps against tax evasion. After all, governments were in dire need of money and had just said they would dedicate trillions to bailout the world.

Henrik Böhme Photo: DW/Per Henriksen
DW business reporter Henrik BöhmeImage: DW

A black list was introduced with much celebration, despite having only four names: Uruguay, Costa Rica, Malaysia and the Philippines. Switzerland managed to stay off the list by promising to negotiate over its banking secrecy rules.

Since then, there have been initiatives and some bilateral agreements to root out tax evasion, but no major steps have been taken. People with a lot of money still do not have any trouble finding a place to keep it out of tax authorities' sight. And when you consider that unpaid taxes on money hidden illegally would be enough to eradicate half of the world's poverty, the injustice of tax evasion is clear. It is also easy to understand why honest people who pay their taxes - or who only make enough to scrape by - are calling for justice.

It is significant to note that it's not politicians who have brought about the change. Capital - it's generally said - is a shy animal that goes wherever it can be left alone. Now it seems there will be fewer and fewer quiet places for money to be left alone.

But I have a serious problem with the source of the data, or to put it another way, with the way it was received. I had the same problem when CDs appeared with information about German tax evaders' accounts in Switzerland and Liechtenstein. Someone invested an enormous amount of criminal energy to hack into an unknown financial institute's computer system and copy reams of data. This illegally won treasure was then not given to the OECD or tax officials - the groups that have fought tax evasion for decades - but to a selection of international media that used the data for research. Are these media aiding justice or abetting criminals?

But let me be clear: tax evasion needs to be punished and people who park their money in foreign countries to avoid paying taxes at home do not deserve amnesty but punishment. But we need to ask ourselves how we act: do we ever pay someone under the table instead of asking for an invoice? Don't we use all the opportunities we can when filling out our personal taxes? Of course, tax laws in Germany drastically need to be simplified and made more just. Financial authorities need modern technology and sufficiently qualified and well-paid officials. Employees at banking Family Offices, the departments where the rich take their wealth to be administered, are much better paid.

Most of all, we need an internationally agreed to process to fight tax evasion. But that's something not even the 17-member eurozone can manage to pull off. The recent near collapse of Cyprus makes that abundantly clear. Capital - that shy animal - will still find a place to stay, it will just have to tread a bit more carefully.

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