The Swiss Parliament has passed legislation allowing UBS officials to hand over the names of 4,450 American tax evaders to the Internal Revenue Service immediately.
The legislation is the latest step in a two-year battle between Swiss bankers and the IRS. The controversy began when the Justice Department accused UBS of facilitating tax evasion by opening up secret offshore accounts for American customers. Threatened with a lawsuit, UBS officials settled the case by agreeing to turn over the names of 4,450 American account holders.
In January, however, a Swiss court ruled that bank secrecy laws prevented UBS from handing over the names. The upper house of Parliament responded on June 3 by passing a bill that would legalize the settlement, but the lower house initially voted down the bill last week. In a second vote, the bill was passed, but only after a provision was added that would put the legislation up for a popular referendum before final approval. By the time the referendum would have appeared on the ballot, the deadline for turning over the names to IRS officials would likely have passed. The IRS had already expressed its willingness to initiate the lawsuit if the conditions of the settlement were not satisfied.
After a week of debate, with some accusing Parliament of capitulating to American demands in violation of domestic law, the lower house removed the referendum provision and passed the bill. Crucial votes were provided by members of the Swiss People’s Party, which dropped its opposition to the bill after initially insisting on a popular referendum. The Social Democrats remained opposed to the legislation, claiming that it should have provided for taxes on executives’ bonuses. The bill was passed by a vote of 81-63.
Following the legislation’s passage, shares for UBS rose as much as 2.9%. In response to the announcement on Thursday, CEO Oswald Gruebel stated, “I and the whole bank thank the government and those parliamentarians who lobbied for finding a solution in this matter.”
For a first-hand account of a UBS whistleblower, written from inside an American federal penitentiary, see “Inside the Cartel” by Bradley Birkenfeld in the Spring issue of World Policy Journal. —Peter Bozzo
Some 600 rebel troops in the northern part of Côte d’Ivoire are agreeing to disarmament and are laying down their weapons. These soldiers in Korhogo are part of 1,200 rebels that are expected to demobilize and join the national army.
The disarmament is a big leap for Côte d’Ivoire toward unity, particularly after there were increased hostilities in the past months. It is even more meaningful because the nation is trying to move toward national elections, something that was more difficult considering that the northern part of the country was not controlled by the government.
Things were looking up for democracy in Côte d’Ivoire until February when the election process was held up due to tensions regarding voter registration. The elections were originally supposed to take place in 2005 but have been delayed many times.
The UN Security Council, which holds a mandate on Côte d’Ivoire to hold elections, gave a one-month extension to the nation “in order to give Côte d’Ivoire a chance to walk the final mile to the elections with the full support of the United Nations.”
French troops are in the country to assist with the democratic process. —Seth Walder
For Japan’s political parties, “It’s the economy, stupid.”
With Upper House elections scheduled for next month, Prime Minister Naoto Kan’s Democratic Party of Japan [DPJ] and its competition, the Liberal Democratic Party [LDP], announced their campaign platforms earlier today. Both platforms zeroed in on fiscal policy, reflecting rising concern over Japan’s public debt—the largest in the world at nearly twice the annual output of the Japanese economy. Both parties promised a primary balance surplus within ten years.
Regardless of which party wins in July, certain tax increases seem inevitable. The LDP’s platform states that it would raise the consumption tax from five to ten percent, and Kan implied that the DPJ would consider a similar number. This five percent increase would add approximately 12.5 trillion more yen ($137 billion) a year to the government’s budget. In addition, a tax panel advising Kan is pushing for an increase in Japan’s maximum income tax rate. However, both parties spoke of stimulating the economy with lowered corporate taxes. For the moment, these proposed tax changes are expected to come into effect in two to three years. —Caroline Soussloff