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Paying for info on tax dodgers is immoral

The Local · 2 Feb 2010, 18:00

Published: 02 Feb 2010 18:00 GMT+01:00

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Should the state pay for illegally obtained data if it can be used to claw back hefty sum of tax money? It might be the pragmatic thing to do, but that doesn’t make it the moral path to take.

Anyone who engages in tax evasion harms society. The state must not tolerate such behaviour, which is why German Finance Minister Wolfgang Schäuble is planning to buy stolen information on tax dodgers who have hidden their money illegally in Switzerland.

Society must protect itself against harm. That is indisputable. Otherwise its very existence would be in doubt. This is, for instance, why we have the police.

But how far does this need for protection go?

Denunciation of criminal acts – universally defined and declared – is a traditional role for authorities, along with knowing when the law is being violated and, equally, promoting people’s willingness to report crimes by offering incentives. Rewards are regularly offered for “helpful information” to help solve crimes.

Germany’s railway operator, for example, pays people up to €600 for reporting vandals caught spraying graffiti. Thus they try to avert harm from that otherwise would affect everybody.

In times past, it was called a bounty put on someone’s head to encourage others to deliver the offender to justice. Dead or alive, as the saying went back then.

Things are different today, yet such a reward from Deutsche Bahn for a vandal, or from the German state for a tax dodger, still exposes the same problem as it did back in the Wild West: It tries to enforce justice in a region where the sheriff or finance minister otherwise cannot. It is a stop-gap measure and therefore an indication of a deeper flaw.

Given Switzerland bucks and stonewalls as much as it can whenever the subject turns to the money in its banks, German authorities are left with the difficult task of pursuing tax dodgers.

Tough luck, one might say. But it’s not enough to say Switzerland regards itself as a democratic country just like Germany. That would fail to appreciate the fact that the country resists the widespread notion that paying taxes is an unavoidable civic duty. It must therefore be the German government’s goal to persuade Switzerland to co-operate – this is happening and already showing results.

To then buy incriminating information regardless, because the profit ratio is so attractive to the taxman (paying €2.5 million in bounty to get €100 million in taxes back), appears to be nothing more than a bounty. It also creates the appearance that a recent agreement on preventing tax evasion, reached with the help of the OECD, isn’t working.

But most important is the unsettling fact that the relevant evidence in this case was stolen and is supposed to be rewarded with a considerable sum of money.

Is the German government now going to establish a pension fund for Swiss bankers? When the bankers are fed up with managing the money of criminals they can simply sell their customers’ information to the relevant authorities. It would have been more ethical had these bankers openly refused to deal with illegal money in years past. But they failed to do this and they are now being rewarded to boot.

According to the philosopher Immanuel Kant, pragmatic acts have nothing to do with morality. Indeed they are the opposite. Every action should also function as a universal principle.

Story continues below…

We would reward an honest person for finding and handing in a wallet. But a thief who remorsefully returns a wallet at best has his sentence reduced. The witness – if he is lucky – goes away as he came, no richer than he was before.

Certainly, the tax authorities should accept the data gratefully and use it if they get their hands on it. Yet even that is not completely above board. German law has no problem with such “fruits of the forbidden tree” as the justice system in the United States does. In that country, illegally obtained evidence cannot be used in court. Not so here.

At least the German government didn’t steal the information itself or obtained via torture or blackmail.

But that still doesn’t mean the tax authorities should make the bearer of this immoral package rich either.

This commentary was published with the kind permission of Zeit Online, where it originally appeared in German. Translation by The Local.

The Local (news@thelocal.de)

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Your comments about this article

16:47 February 5, 2010 by provita67
Please know that These income tax monies, as with all income taxes, will only be payed on the interest due on the loans given to the government by the banking cartels.
08:41 February 6, 2010 by ColoSlim
I agree illegally obtained information can be bought but at what cost. One issue not brought up would be the legality of using this information in court. Another is should tax payer money be used to purchase stolen goods? Immoral definately; illegal probably.
11:26 February 8, 2010 by Deutschguy
This is not an immoral act.

What is immoral and a crime against honest taxpaying citizens is that procuring evidence exposing criminality regarding tax evasion is deemed illegal. That is nothing more than a law preemptively written by the wealthy scofflaws who engage in this practice. Don't think for a moment that Swiss and Lichtensteiner bankers have not lobbied for this law.

Exposing tax evasion with evidence, even if it is purchased and violates Swiss law, should be carved out as a special legal exception as perfectly legal.

What the rest of the world of nations should do is blacklist all nations and provinces that allow or make legal 'secret banking' and those who make it a crime to reveal names and information about depositors. Switzerland would turn around very quickly if planes and trains were blocked from going there and if it were illegal to travel there.

The world is different now. We are all potentially in jeopardy from the same big banks, especially investment houses. Therefore, transparency and the free and open exchange about financial information to central banking and tax authorities is necessary to protect our economic health, pensions, and asset values.

If Swiss bankers make less money, well, cry me a river.
10:45 February 9, 2010 by Celeon
It is indeed not immoral.

Its the only thing left to do with a Switzerland that watches since decades how its banks and economic lobbyists make business with tax evaders from around the world, refuses help to other countries that try to persecute these people and only acts in tiny steps only if pressured enough on the diplomatic and economic level.

Interestingly Switzerland does not see anything immoral in that. Thats ok because they simply decided to write a law in their country that basically says so and makes a rediculous difference between tax fraud and tax evasion for its personal advantage.

Organized help and support for millions that knowingly break the law and hurt the state structures in their respective countries since decades is nothing illegal or even immoral for the swiss.

But a country which did not recieve any credible LEGAL help by Switzerland to get their hands on thousands of criminals that is now making a deal with a single "criminal" to persecute thousands of others that do real damage is so immensely outrageous?

Well, in that case Switzerland should prepare for more outrageousness to follow from Germany, the USA, France , Spain , Italy, Belgium and the Netherlands because all these countries timing their actions for the first time is the beginning of a process at which's end the "Bankgeheimniss" is destined to fall.

There is still time to resolve this the civilized way if Switzerland finally begins to overthink what it does and change its attitude, otherwise the forenamed countries will deal with the swiss banks directly in a way which the swiss government can do nothing about and that could hurt Switzerland's reputation in the world.

The USA has already threatened UBS to suspend it indefenitely from the New York stock exchange if it does not cooperate in identifying u.s tax evaders.
13:22 February 9, 2010 by Wim van Couveren
This easy willingness from the side of the German state to shamelessly pay for stolen bank data ­¦#39;Wild West¦#39; practices in fact -have shaken the Swiss private banking industry and whipped up emotions in both nations.

Intense media coverage of the action against tax evaders has shown to been popular among average Germans ­ while Schaeuble¦#39;s own CDU party is becoming more and more un-popular. These two facts are entirely related!

¦#39;Populism¦#39; can be defined as the philosophy of urging social and political system change that favours ordinary people over the privileged elites - or put another way -favours the common people over the rich and wealthy business owners. ¦#39;Populists¦#39; are by definition against big business.

So it is always amusing when politicians from the CDU dress-up as so-called ¦#39;Populists¦#39; so they can ¦#39;help the ordinary tax-payer¦#39;!

German Finance minister Schaeuble of the CDU said on Sunday that ¦#39;the German public has no tolerance for a state that does not do its utmost to fight tax evasion¦#39;.

He also alluded to the growing social tension caused by the global financial credit crisis, growing unemployment and the large bonus payments being paid out by large corporations.

Using the same logic the German public also has no tolerance for a state that compensates large banks and large corporations - in this very same crisis bank bailouts shifted private sector debt onto the unwilling German taxpayers ­ but the minister made no mention of this nor how this over-riding problem was to be addressed in the long term.

Misery loves company and in order to diffuse the controversy and spread the blame of these very questionable practices ­ making its own action look more legitimate - the German Finance Ministry will pass on any information obtained about tax evaders in other EU countries to them for free.
19:06 February 9, 2010 by voidplay
It is not just 'tax evaders', it also includes dictators, terrorists, corrupt officials/politicians, international scamsters amongst its list of clientèle, clearly what Germany is doing is spying by hook or crook on a nation which flouts international laws and ethics.

If Switzerland had been a third world non European country, it would by now branded a terrorist state, and an international threat and may have been already flattened out.
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