Swiss MPs reject US tax evasion agreement

Swiss MPs reject US tax evasion agreement
Switzerland’s lower house of parliament has voted against debating a secret deal between Bern and Washington aimed at settling a legal battle over Swiss banks’ alleged complicity in tax evasion by American citizens.

The house of representatives, or national council, voted 126 to 67 against considering the “Lex USA” with two abstentions.

The rejection marked a major defeat for Finance Minister Eveline Widmer-Schlumpf who promoted the deal made between the governments of the two countries at the end of last month.

She had urged parliament to approve the legislation, which would have allowed Swiss banks to circumvent the country’s banking secrecy laws to turn over account information to US tax collectors.

The lower house rejection of the deal follows the recommendation of a parliamentary committee last week, although the senate previously backed the measure.

Widmer-Schlumpf will now take the bill back to the upper house of parliament for reconsideration on Wednesday.

If the senate rejects it, the legislation is dead.

If it approves the deal, the matter will return to the lower house.

The deal is seen as crucial if Swiss banks are to escape the threat of a raft of lawsuits in the United States, as well as being barred from the big and profitable American market.

But they could also fall foul of Swiss law.

Swiss banks are believed to hold accounts worth billions of dollars belonging to American citizens who have not declared these assets to US tax authorities.

With the global economic crisis having put tax havens into sharp focus — notably at the G8 summit this week — Switzerland has fought to defend its cherished principle of banking secrecy by giving ground in some areas but declining to allow the automatic handover of account details.

Under current international rules, the United States has to make a formal request for legal assistance concerning a specific individual tax-dodger, a procedure seen as cumbersome in Washington.

Under the take-it-or-leave-it deal proposed by the US side and approved by the Swiss government at the end of May, Swiss banking secrecy rules would be frozen for one year for American clients.

But parliamentary approval is required for the change, otherwise the banks risk finding themselves on the wrong side of Swiss law if they give US authorities the names.

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