The latest changes in the French tax evasion policy and its influence
3. Reasons of intensification of combating tax fraud and tax evasion in France
3.1. The role of the financial and economic crisis and the co-operation of international organisations
The financial and economic crisis that began in 2007 has emphasized the need for special care not only regarding the expenditure side of the budget but also of the income one and led many countries, including France, to the increased reflection on the possibility of the optimisa-tion of the tax revenue.
These actions seek to avoid the creation of new taxes or raising ex-isting ones, which would be detrimental to the economic situation of the country, but also unfair from the point of view of social justice, because new (or higher) taxes would be paid (as the existing ones) again by the majority of the taxpayers, who also previously regulated their tax duties. What is more, it would be contrary to the art. 13 of the French Declaration of the rights of Man and Citizen of 1789 that pro-vides that a general tax is indispensable for the maintenance of the public force and for the expenses of administration; it ought to be equally apportioned among all citizens according to their means.
Therefore, it obliges the authorities to ensure the effectiveness of the principle of equality under taxes of all citizens according to their con-tributory capacities.
As the French Budget Minister, Éric Woerth, incited in May 2009 in the difficult economic situation: Do not look only for the solution to the crisis. The crisis should force you into the reflection about the effectiveness of the existing solutions.” Actually, France is the
3 Rapport du syndicat national Solidaires Finances Publiques Evasions et fraudes fiscales, contrôle fiscal, Janvier 2013, pp. 57.
ple of the country where the crisis has not only contributed to the ap-pearance of the problems that immediately should have been solved, but also revealed failures of the country, i.e. the growing phenomena of tax evasion and tax havens. It cannot be denied that the financial and economic crisis, apart from its severe financial consequences, also had a positive influence on the intensification of international co-operation against tax evasion and tax havens.
Due to the increased pressure of the G20, the OECD standards on transparency and exchange of information have become widely recog-nized international norms. Four OECD countries, which have so far opposed them (Austria, Belgium, Luxembourg and Switzerland) with-drew their opposition. Three tax havens (Andorra, Liechtenstein and Monaco) agreed to these standards in March 2009, four countries of the World Forum (Costa Rica, Malaysia, the Philippines and Uruguay) followed suit [Esclassan, 2010, p. 73].
Also at the level of the European Union, the works on the fight against the evasion of tax and tax havens were accelerated. It is esti-mated that scandalous EUR 1 trillion of potential tax revenues is lost to tax fraud, tax evasion, tax avoidance and aggressive tax planning every year in the EU, representing an approximate cost of EUR 2,000 for every European citizen each year.4 The European Parliament has prepared the motion for a European Parliament resolution on the Fight against Tax Fraud, Tax Evasion and Tax Havens. During the summit of 22nd May 2013 that took place in Brussels, the European Council composing of the chiefs of States and governments of 27 EU members took the decision about the acceleration of combating tax fraud and evasion and decided about a new agenda of actions.5
3.2. Impact of tensions between France and Switzerland The tensions between France and Switzerland that started in 2009 and which have lasted until now were one of the direct reasons of the in-tensification in France in the fight against tax havens. In August 2009, the French Budget Minister, Éric Woerth, released a list of the 3000
4 Report of 2nd May 2013 on Fight against Tax Fraud, Tax Evasion and Tax Ha-vens, Committee on Economic and Monetary Affairs, No. A7-0162/2013, p. 4.
5 Commission contribution to the European Council of 22nd May 2013. Combating tax fraud and evasion, pp. 1–9
“tax evaders” –the millionaires – and asks them to report to the tax authorities. It was later learned that the list was created on the basis of the information stolen by Hervé Falciani, the former computer scien-tist of a Geneva branch of the HSBC bank. Hervé Falciani who has duel, Franco-Italian citizenship, during several years had copied the information about customers from the HSBC bank where he worked.
After leaving Switzerland he wanted to sell the information about potential tax-evaders to the governments of different countries. The Swiss authorities has issued the international arrest warrant against him, however they made a serious mistake: they asked the French to search his home, seize his laptop and send to Switzerland all of his archives. The French authorities found on his laptop the information about 130,000 customers of potential tax evaders from different coun-tries. Hevré Falciani decided to co-operate with governments against the phenomenon of tax havens. Now he lives under protection of the Spanish government who refuses his extradition to Switzerland.
The French President, Nicolas Sarkozy commented the publication of list of the 3,000 tax evaders that “in these times of crisis, fraud is not acceptable.” The case of the former employee of HSBC has sparked a diplomatic crisis between France and Switzerland. Berne accused Paris of illegal detention of the stolen data. The French government, in turn, threatened to put Switzerland on the OECD blacklist of tax ha-vens. In January 2010, the new Franco-Swiss double taxation agree-ment entered into force that provided the exchange of tax information upon request. In March 2012, two main candidates in the French presidential election – Nicolas Sarkozy and François Hollande – sug-gested taxation of the rich French who had settled in Switzerland. This measure would require a revision of the Franco-Swiss agreement. In August 2012, the new agreement on succession was signed by the two states. The successors resident in France or Swiss residents are now taxed by the French tax authorities. This text aroused strong opposi-tion in Switzerland. In December 2012, Paris removes the “tolerance”
that allowed people to pay a lump sum in Switzerland to benefit from the privileges of the double taxation agreement.
At the end of 2012, the political and financial scandal involving Jérôme Cahuzac, the French Budget Minister, broke. Accused by the online news site Mediapart of possessing undeclared funds in an ac-count in Switzerland, then in Singapore, Cahuzac repeatedly proclaimed
his innocence, including before the deputies to the National Assembly.
The day of the opening of a judicial inquiry, on the 19th of March 2013, the president Francois Hollande announced the departure of its government minister. Jérôme Cahuzac before the judges plead guilty in April. He is accused of money laundering coming from tax evasion.
Finally in May 2013, the French Development Minister put Swit-zerland among other 16 countries on a blacklist of tax havens which means that these countries cannot distribute financial help from Agence Française de Développement (ADF). Even if this decision does not have important financial consequences to Switzerland, it reveals a very offensive climate in Paris against this country and shows that its tax co-operation is considered to be insufficient [Berchem, 2013].