What happened

The German secret service (BND) was offered a CD with data of about 1.400
tax offenders who created a foundation in Liechtenstein, of which about
half are from Germany. The BND bought the CD for a bit more than 4
million € with funds of the government. This is at least the offical
story. There are also indications that more than one source of information
is used. Anyway, since the middle of February the tax authorities are
searching homes and offices of wealthy Germans and companies. They started
with the CEO of Deutsche Post Zumwinkel who had to step down from his post
afterwards.

Development of the public discourse

The whole scandal is highly mediatised. All national newspaper published
several pages on the scandal. This created a huge public debate. First the
debate concentrated on maralising the behaviour of Zumwinkel and others of
the elite. Politicians from all parties, the federation of German
industry, intellectuals and many others criticised Zumwinkel and tax
evaders in harsh words. The public outcry was so loud as it fitted into a
general unease about the growing share of GDP whichn goes to high income
earners. Now, it became evident that many of them are not even ready to
pay taxes on their growing income share. The fact that tax havens and tax
evaders exist was known before but with Zumwinkel they had a face.

Later the debate shifted towards the tax havens and Liechtenstein in
particular. For some days the neoliberal forces were totally paralysed.
The media caused a huge pressure on politicians to take action.

In the beginning demands concentrated on higher punishments for tax
offenders. This argument was also taken up by conservative forces in order
to avoid a debate on more systemic issues. We tried hard to shift the
discourse to the structures of tax evasion and tax criminality. In
particular, when the prime minister of Liechtenstein Otmar Hasler came to
visit Germany on the 20^th of February including the finance minister and
the chancellor, the debate debate shifted towards the question how to
close the tax havens.

The neoliberals tried to respond with three arguments:

First, it is the German tax system itself which is responsible. If tax
rates were lower and the system easier, capital would not move out of the
country. This argument got important space in the media, but it did not
win the debate. First, similar proposals had shaken the 2005 federal
elections. Lowering top marginal income tax rates is simply unpopular in
the face of growing inequalities. It is no option for the government.

Second, the government has just lowered tax rates on capital income to 25%
and closed some tax loophole for capital gains. This was and is responded
by the owners of capital by a vague of investments in tax havens. This
proved the neoliberal thesis wrong that rich individuals are ready to pay
25% on their capital income if they can pay nothing abroad while a strict
banking secrecy protects their fraud.

Second, the neoliberals tried to shift the attention to the methods
employed by the BND, the tax authorities and the government. They insisted
that the state may not buy data obtained in an illegal way. Anyway, the
large majority of the population supported the action of the state.
Nevertheless, ethical doubts about the BND action remain.

Third, many members of the elite tried to insist that it is only a few
offender who evade taxes while the majority of the economic elite
contributes a considerably to public finances. Nevertheless, most Germans
do not believe this as trust in the elite of the country is at a historic
down since the second world war. The claim of the large ethical majority
is also refuted by the at least 400 bn € invested by Germans in the
world’s tax havens.

Despite strong efforts, these neoliberal responses could not change the
debate fundamentally. There is a continued pressure on the government to
take action against the tax havens. The topic will not disappear because
the investigations against tax evaders will continue for at least one or
two years, even if the space in the media is already shrinking. Thus the
government has put the topic on the agenda of the meeting of the EU
council of Econmoc and Financial ministers on the 4^th of March 2008 in
Brussels. Furthermore, the topic was raised during the state visits of the
prime minister of Liechtenstein and of the prince of Monaco in the end of
February 2008. Unfortunately, the issue was not important during the visit
of the prime minister of Ireland (also end of February 2008) which is one
of the key country obstructing progress in tax matters in the EU. Doubts
about the consistency of the governments’ activism also arrises because of
the demands put to Liechtenstein and Monaco. Basically, chancellor Merkel
demanded that the tax havens should sign several international agreements
including the EU’s anti-fraud treaty and agree with the OECD’s tax
information sharing approach. But, the government did neither demand
automatic information sharing of tax information nor minimum tax rates.
Furthermore, there are different opinions whether sanctions should be used
in order to render tax havens more co-operative. The finance minister
Steinbrück has demanded these sanctions while the public discourse
developed.

What Attac did

Attac, coordinated by its working group on tax evasion & policy, was the
only non-governmental force which has been following the scandal actively
over the whole period. Thus we got invited to at least 15 TV shows and
statements. We published opinion pieces in national media and gave radio
interviews. On the occasion of official visits of the prime minister of
Liechtenstein and the prince of Monaco we organised two actions in front
of the chancellery. The actions were strongly supported by activists of
Attac Berlin. The images of these actions were widely published in German
media. On the 1^st of March Attac Switzerland, Austria, Germany and France
organised a small demonstration in Liechtenstein to protest against all
tax havens. The action was widely reported in Liechtenstein and Austria.
European Attacs published a common declaration on tax havens.
But most importantly, on the 22^nd of February we published an „Attac
action plan to close down tax havens“. Attac demands in the plan a
combination of tough national and international measures in order to track
down tax evaders and close the tax havens in co-operation with other
countries but not waiting for the tax havens to agree with the measures.

The plan was presented in a common press conference with the Attac members
Björn Böhning, speaker of the social-democratic left, and Heiner Geißler,
former general secretary of the conservative party, mirroring the party
composition of the German government. The national teachers union, the
federation of reformed churches, the development organisation medico
international, the Youth organisation of the social democratic and the
green party and several other organisations supported our action plan. The
plan was widely taken up in the media. The German confederation of trade
unions wrote an own plan based on our demands. The left party in the
parliament supported the plan. We could discuss the demands in a widely
recognised TV debate with the finance minister Peer Steinbrück. In the end
of April we will meet Steinbrück officially to discuss the plan and the
state of measures taken by the government to close down the havens.

Some first conclusions

The progressive forces won the debate on measures against tax havens
because of the mediatised pressure which was caused by the tax fraud case
itself in combination with general political atmosphere in Germany leaning
towards social justice. Attac could play an important role in this
discourse victory, also by co-ordinating with different social and
political forces. It is the first time in Attac Germany’s history that we
could gain such a prominent role as experts in a particular policy field.
We had an important influence on the development of the discourse in the
media and in civil society.

Despite, the victory in the public discourse we should not trust too much
that the political consequences will go beyond symbolic politics. The EU’s
and OECD’s as well as bilateral actions against the tax havens have all
failed so far. The conflict with the tax havens needs a political conflict
with the powerful interests who profit from international tax competition.
It also needs a conflict in the EU with the countries who defend the tax
havens or do not want to give up the tax haven as features of their own
financial centres.

The tax justice network as well as Attac should rethink whether the
struggle against tax havens should really be framed mainly as a
development issue. Seen in the light of the German tax scandal the
political potential of the issue seems much higher if it is framed as a
question of social justice and of financing of public goods supported by
democratic and developement arguments.

Sources:

Common Attac declaration:

http://www.attac.de/aktuell/presse/presse_ausgabe.php?id=848

Attac Germany’s plan to close tax havens:

http://www.attac.de/steuerflucht/cms/pages/attac-aktionsplan/langfassung.php

International figures and demands:

www.taxjustice.net