Financial Transparency Coalition

On a nasty Belgian back-room move to suppress European financial transparency. But first, some background.

The European Union’s savings tax directive is an excellent idea: governments automatically report to each other, on a multilateral basis, the income-generating assets of each other’s citizens, so that those governments can tax them properly. Unfortunately, it is full of loopholes – punched in the directive as a result of efforts by the likes of Luxembourg, Austria and the United Kingdom to preserve as much secrecy as possible in the financial sector.

Recently, some in the EU have been trying to patch up some of the loopholes. A second directive has been initiated on administrative assistance in tax matters, which is a parallel attempt to have a similar result to the Savings Tax Directive. The original proposal from February 2010 is here.

Take a look at Article 8 on page 16: the original proposal does not specify the categories of information to be exchanged. But this was amended, also in February, by the European parliament, in a process initiated by Mme Alvarez Magdalena (a Spanish Member of the European Parliament, or MEP, and a tax investigator.) This produced a draft arguing for the right kinds of information exchange to be applied on a nicely transparent set of things:

• Income from employment
• directors’ fees
• dividends
• capital gains
• royalties
• life insurance products not already covered by the STD and other measures
• pensions
• ownership of and income from immovable property

Now, thanks to another European MEP, Sven Giegold (as it happens, he was a founder member of the Tax Justice Network who left to move on to other things), a murky document has come to light on this subject. It appears to be an effort by the presidency of the Council of the European Union, currently held by Belgium (a secrecy jurisdiction) to water down the initial proposal for the directive until it becomes almost toothless.

Attac-Austria has published the document (of which only a part is visible on Giegold’s website) in full. It comes from the Belgian presidency of the European Union Council – and look at what Belgium has crossed out. Dividends, capital gains, and royalties! (And, a bit further down, a more minor change: the date has been modified slightly.)

This is a scandal, and Giegold and Attac-Austria have performed a valuable service. The Belgian presidency has been caught with its fingers in the till.