May 30, 2013 6:27 pm

Swiss government faces battle over bill to resolve US tax dispute

Chalets in Davos©Corbis

The Swiss government faces an uphill battle to push through plans to resolve the country’s tax dispute with the US, after a number of political parties roundly criticised or threatened to reject the bill.

Switzerland’s parliament is due to vote on the measure in June, but there is so far little indication that the legislation commands a majority.

In a sign of the challenge facing the government, parties objected to the content of the bill – which would create a legal basis for Swiss banks to reach individual settlements with the US over their alleged involvement in helping rich US citizens evade taxes – and the government’s plan to rush it through parliament.

The Social Democrats, Switzerland’s second largest party, said they would reject the bill, arguing it was not the job of politicians to come to the rescue of banks that had decided to “continue to do business involving untaxed client money”.

The Swiss People’s party (SVP), the largest grouping in the lower house of parliament, sharply criticised the plan to hurry the bill through parliament in the June sitting, rather than following the normal, more protracted legislative process. The SVP also took issue with the fact that the details of the settlement programmes that Swiss banks will have to agree with the US have not yet been disclosed.

“In such an unclear situation . . . it is not right for the parliament to override Swiss law in a matter of days with a bill that is effectively a capitulation, without, for example, even knowing the key points of the programme that the Americans have drawn up for Swiss banks,” the party said in a statement.

The SVP’s concern about the circumvention of normal Swiss legislative procedures was echoed by the Greens.

“We don’t understand where this urgency comes from,” Miriam Behrens, the party’s secretary-general, said. “The negotiations have been going on for years, and the banks have a year to decide whether or not to settle with the US, so why does the bill have to be rushed through parliament in three weeks?”

The Greens have not yet decided how to respond to the bill, putting them in the same position as the centrist Christian Democratic People’s party, and the Liberals, which is Switzerland’s third largest party.

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If the bill were rejected in parliament, the government would have to come up with a new proposal for resolving the dispute. However, its room for manoeuvre is limited, as any new proposal would need the blessing of the US, which has shown few signs of being particularly biddable in recent negotiations.

Switzerland’s finance ministry said on Wednesday that if a deal were not reached, it would be impossible to rule out the Swiss nightmare scenario of further US moves against Swiss banks. Wegelin, Switzerland’s oldest private bank, was forced to close earlier this year after it was indicted by US authorities.

Yet despite such risks, the Swiss media was also prepared to contemplate the deal’s rejection. In a front-page editorial headlined “Unacceptable for a democracy”, Tages-Anzeiger, a Swiss daily, described the government’s proposal as the result of “blackmail”.

“The parliament should only back the government's proposal once it knows the precise details,” the newspaper argued, highlighting the risk that bank employees could be punished for breaking American, rather than Swiss, laws.

“That is the same as if someone had to pay a fine for driving at 120kmh on a Swiss motorway – because they had broken the 55mph speed limit that exists in some US states.”

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