Tuesday, June 14, 2011

Why is Gillian Tett taking the banksters' line on transparency?

Gillian Tett is a widely respected Financial Times senior staffer who was one of the few to be outspoken, accurately and presciently, about the emerging risks ahead of the global financial crisis. She's written many fine things.

So we're shocked to see her having been, apparently, nobbled by the banking lobby. She has just written an article about the US' pathbreaking Foreign Account Tax Compliance Act (FATCA) - something that has the potential to bring real teeth to the U.S.' efforts to track down criminal tax evasion activity by U.S. citizens. (Read about FATCA here.)

So why has she written something so (transparently) one-sided, against transparency? Take this, for example:
"While this logic might sound sensible, the new rules leave some financial officials fuming in places such as Australia, Canada, Germany, Hong Kong and Singapore. Little wonder. Never mind the fact that implementing these measures is likely to be costly; in jurisdictions such as Singapore or Hong Kong, the IRS rules appear to contravene local privacy laws."
Is she serious? Make no mistake: Hong Kong and Singapore are helping U.S. citizens commit tax crimes - and Tett wants to protect that, justifying this behaviour by approving of their secrecy laws? Take a look at the secrecy provided by these places - first Hong Kong, then Singapore.

And she happily parrots the routine bankers' threats: don't make us be transparent, or tax us too much, or we'll run away - and she doesn't even offer a balancing quote?

Is this nice, from an earlier FT story about FATCA?
Disclosure records show groups including Switzerland’s Credit Suisse, Barclays of the UK and TD Bank of Canada have together spent millions of dollars lobbying on the issue . . . Disclosure records and public comments show that BlackRock, the fund manager, and Citadel, the hedge fund, have been active in calling for relief.
Here's a much more sensible way of looking at FATCA:
"And why are these banks doing this? Because they say it will cost too much to stop tax evasion. Which of course is not true: what these banks are actually saying is that they don’t want to bear the costs of their supplying their clients with the facilities to tax evade: they’d rather society bore that cost instead."
So why is Tett supporting their lobbying effort? An aberration in an otherwise fine career? Has something happened to Saint Gillian?

P.S. FATCA is a form of automatic information exchange - albeit a one-sided one aimed at benefiting the U.S. taxpayer and at cracking down but without helping foreign governments do the same thing. It is a useful, if incomplete, measure dealing with tax evasion. As a useful unilateral tool, it's easier to implement, politically speaking, than one that requires international agreement.


Anonymous Anonymous said...

This tool targets a very small part of the foreign banks customers, while imposing due dilligence on all the customers accounts base.

6:44 am  

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