Results tagged “uruguay bank secrecy”

Uruguay bank secrecy hangs delicately poised after conflicting statements of intent from rival candidates ahead of October presidential elections.

Just a week after Frente Amplio candidate Jose Mujica signalled his intent to discuss bank secrecy within the Mercosur group in an interview with an Argentinian newspaper, opposition candidate Luis Alberto Lacalle apologized for his rival's remarks at a lunch given by the Uruguay-Argentina chamber of commerce.

When questioned on the issue of bank secrecy, Lacalle stated categorically that he would not hand over bank secrecy if he won the election. He further backed up his statement with the following reasons (translation from an article in Uruguayan newspaper el pais).

- Uruguay politics should be geared towards maximising the nation's comparative advantages.
- Financial activity generates wealth and employment
- For Uruguay to act like small countries such as Luxemourg and Switzerland is completely legitimate.
- It is hypocritical for large countries to try and impose policy in this way when in places like the US state of Delaware ''they wash, iron, and dry'' money (a reference to the number of secret companies formed in that state).
- In the cases where it is called for bank secrecy can still be lifted.

With just weeks to go until the country decides, Mujica looks better placed to win the election.

We are by now used to hearing rhetoric about "pledges" to end bank secrecy and an end to tax havens, as if forcing another country to change its legal code were a natural course of action.

But what do the so-called tax havens think about all this? Here's an interesting article from Uruguayan newspaper El Pais (Uruguay was one of the 4 countries originally placed on an OECD "blacklist"). The author, respected Uruguayan economist Ignacio De Posadas, makes the case for Uruguay keeping it's bank secrecy law. Now of course he cannot speak for a country of 3 million people, but its revealing nonetheless to hear their story, not often represented in the Western press. The article is written article in Spanish; here are some of his arguments in translation.

- The issue isn't about when people use bank secrecy to commit serious crimes, nobody disputes that.

- Uruguay doesn't have any obligation to enforce the collection of French or British taxes (nor would those countries give them anything in return).

- What right do "powerful" countries have to pressure smaller countries into changing their internal laws - an action which will benefit the more powerful and result in a loss for the smaller country?

- The OECD text says that tax havens should bring themselves in line with "international standards" for tax-information sharing, as if it were a UN convention or some other multilateral agreement signed by Uruguay, when really it's an OECD convention, of which Uruguay is not a member and has nothing to do with.

- Why are they doing this? Because over several decades OECD countries have been expanding and complicating their systems of taxation - out of all proportion with the return these administrations give to taxpayers. In other words - it's their problem. What does Uruguay have to do with it?

- How does bank secrecy benefit Uruguay? In reality the question isn't being put in the right way. Bank secrecy is consecrated in the constitution. Of course there are limits and norms to bank secrecy, but these aren't pre-requisites. In other words..it doesn't matter if it benefits Uruguay or not, it's a right. Full stop.

The war on tax havens is about strong and powerful countries using force to impose themselves on smaller nation states. There are no guns but the principle is the same.

More on bank secrecy.