Financial Transparency Coalition

Two weeks ago, the twenty most powerful leaders of the world headed to Cannes, France for the G20 Summit. It was the G20’s sixth meeting in a series of ongoing discussions about the world’s financial markets. While the meeting did not reach any concrete policy decisions on a host of important issues plaguing our financial world, some of the accomplishments of the meeting included a few pointed and poignant statements from some of the world’s most powerful. One of these statements came from Indian Prime Minister Manomohan Singh, who urged the world’s twenty most powerful countries to agree to automatic exchange of tax information. His comments were an important step forward for the world and for India.

The other powerful statement to come out of the meeting in Cannes was from French President Nicholas Sarkozy, who had some very strong words for uncooperative low tax jurisdictions. Sarkozy intonated that a list of eleven uncooperative jurisdictions should be “excluded from the international community,” including: Barbados, Trinidad and Tobago, Antigua, Botswana, Brunei, Panama, Seychelles, Uruguay, Vanuatu, Switzerland and Liechtenstein. He added that a list of countries which do not conform to acceptable tax practices would be published at all future G20 summits. “We don’t want to have tax havens any more.” He said “Our message is very clear.”

Loud and clear, sir.

The countries on Sarkozy’s list have reacted with varying degrees of hostility, indigence, and feigned bewilderment. In Barbados, for instance, the Minister of Foreign Affairs and Foreign Trade Maxine McClean insisted that “Barbados is a low-tax jurisdiction…not a tax haven.” Well, sure, you can label it any way you want, but the fact remains that Barbados surrounds its banking sector with a shroud of obscurity and will not participate in automatic tax information exchange. And for the record, yes, it’s also a tax haven.

There were also reactions from some jurisdictions that did not appear on Sarkozy’s list. This included Isle of Man, a British Crown Dependency and a tax haven according to the OECD. Or if that’s not compelling enough evidence, see this eHow article, titled “How to Avoid Tax with an Isle of Man Bank Account.” That’s not a joke. Needless to say, Isle of Man felt a wash of relief when Sarkozy didn’t call its name. Chief Minister Alan Bell called the news a “major step forward,” noting the statement was “very good” for the Island’s reputation. Okay. Sure. It’s just not saying much when your definition of “very good” is “not being ostracized by the world community.”

It was Switzerland, however, that reacted the strongest and most indignant. A spokesman for the Swiss State Secretariat for International Financial Matters told the world that they “were very surprised and dissatisfied.” This year’s Swiss president, Micheline Calmy-Rey, called Sarkozy’s remarks “ungrounded” and hypothesized that Sarkozy must have “a problem with Switzerland.” Calmy-Rey added that she did not know what this problem could be.

Okay. What could that problem possibly be? Here’s a thought. Maybe it has something to do with your country helping citizens of other countries, like France, avoid and evade their taxes. But that’s just the first thought that sprung into my head. I guess it could be something else, too.