Switzerland Backs Out Of Tax Secrecy Deal with US

In a fascinating development that one can only hope means that Switzerland actually wants to retain its status as a sovereign state and not just be a satellite country of the US, Swiss lawmakers have rejected a proposed settlement that would have seen Swiss banks turn over information on US clients to the US Internal Revenue Service.

"Switzerland's efforts to calm a banking furor hit a major setback Tuesday as nationalist and left-wing lawmakers blocked a treaty with the United States that would have allowed UBS to hand over thousands more files on its American clients to U.S. tax authorities.

The Swiss government and Washington had painstakingly crafted the treaty last August to resolve a long-standing dispute over the bank's alleged role in aiding tax evasion but 104 lawmakers in Switzerland's lower house voted against the deal Tuesday, compared to 76 in favor. Sixteen lawmakers abstained.

The government had urged lawmakers to approve the deal to avert harm to the Swiss economy, which is heavily dependent on the country's banking industry."

This blog does not advocate tax evasion, so being in favor of the squashing of this deal should not be viewed as approving of any American being able to dodge one's rightful US tax obligations.

However, it's high-time that the US stop bullying other countries around the world (militarily, economically, etc.) and in that vein, it's just outstanding that Switzerland finally came to their senses and rejected this one-way agreement.

Switzerland has long been viewed (and celebrated) as an independent, neutral 3rd party, where people could take refuge in their longstanding bank secrecy laws to overcome confiscation attempts in their home countries. This had been jeopardized by seemingly cowing to the US demand that the Swiss act as US tax agents.

The notion that parts of the Swiss government had tried to sell this deal on the basis that failing to enact it would "harm" the Swiss economy is ridiculous. In fact, signing the deal would likely have caused by far the most damage, as a lot of their current clients would have picked up and left, knowing that the reason for being in Switzerland (an undying devotion to secrecy) was over.

So let's celebrate the fact that one of the tiniest countries in the world has stood up to the US, and in doing so, has retained a major piece of their own heritage.

Update: the Swiss parliament has now shamefully ratified the deal, making its passage much more likely.