Parliament has thrown out a draft law enabling Swiss banks to hand over confidential data to the United States cracking down on suspected tax cheats. However, it called on the cabinet to find legal means to resolve the standoff.
For the second time in as many days, the House of Representatives on Wednesday rejected a government-sponsored bill which would have paved the way for the Swiss banks suspected of helping wealthy Americans to evade taxes to reach a settlement with US justice authorities.
An alliance of the rightwing Swiss People’s Party, the centre-right Radical Party and most of the centre-left Social Democrats won the upper hand with 123 votes against 63 mainly from centrist parties led by the Christian Democrats.
Earlier in the day, the Senate – the other parliamentary chamber – clearly confirmed its approval of the draft law. It had initially agreed last week.
Opponents of the bill argued that not enough was known about the consequences of the law and that the deal could set a precedent for other countries waiting to put pressure on Switzerland.
Finance Minister Eveline Widmer-Schlumpf said the government-sponsored bill was aimed at allowing banks suspected of helping tax evasion to put an end to an ongoing legal standoff with the US justice authorities.
She added Washington would not treat Swiss banks harsher than suspected tax cheats in other countries.
Limited legal protection
Widmer-Schlumpf hinted that the government could consider granting individual banks the right to disclose confidential information if formally accused by the US.
She pledged that the protection of bank employees had priority.
However, the government cannot provide full legal protection for banks without a special law approved by parliament, according to Widmer-Schlumpf.
She warned that failure to adopt the bill could lead to additional difficulties with a US law on future tax compliance by Swiss banks set to come into force next year.
Declaration approved
Both chambers approved a parliamentary declaration recognising the need for Swiss banks to come clear with the US over tax matters of the past.
The statement calls on the cabinet to allow individual banks to hand over confidential data to the US, temporarily suspending banking secrecy rules.
Critics argued the statement has no legal value and is merely an effort by parliament to appease the US authorities.
Under the draft law, Swiss banks would have had the option to negotiate a settlement with the US justice authorities within 120 days. The proposed law also foresaw unspecified fines for banks which plead guilty to helping taxpayers hide assets from the US authorities.
Of the 300 banks in Switzerland, up to 250 would have had to find a legal solution with US authorities.
At least 14 banks have been under ongoing investigation by the US, and two of them were forced to close their doors for business as a result.
In 2009, Switzerland’s largest bank UBS handed over nearly 4,500 names to the US and agreed to pay a hefty fine. Cabinet had gave the green light for the name transfer with an emergency decision that temporarily suspended Swiss banking secrecy.