The World From Berlin 'The Tax Scandal Has Reached a New Level'

In one of the biggest tax evasion scandals in recent German history, an informant last week provided the government in Berlin with data on hundreds of people hiding their wealth in nearby Liechtenstein. On Thursday, the scandal widened to include German banks. The social implications, commentators say, are massive.


Scene of the crime? Vaduz castle, home to Liechtenstein's hereditary monarch. The tiny principality has been at the heart of a recent tax scandal in Germany.
DDP

Scene of the crime? Vaduz castle, home to Liechtenstein's hereditary monarch. The tiny principality has been at the heart of a recent tax scandal in Germany.

It began with the CEO of Deutsche Post, and has spread fast in the last week: a massive investigation into tax evasion at the top levels of German business. At issue are top earners in Germany who use the tiny tax-haven principality of Liechtenstein as a place to hide their wealth from German authorities.

Last week, the news broke that a confidential informant sold the BND (Germany's intelligence service, the equivalent of the American CIA) a DVD packed with data tracing the flow of money from tax-evading wealthy Germans to foundations in Liechtenstein.

On Thursday, the scandal widened to include German banks accused of actively managing shady Liechtenstein foundations -- and advising their clients to shift their money there to avoid taxes. Hundreds more raids are planned in the weeks to come.

As Germany's tax evasion woes continue to worsen and the stench of conspiracy gets stronger, the larger meaning of the scandal is gripping the German press.

The left-wing daily Die Tageszeitung crows that this is confirmation of a long-suspected conspiracy:

"The tax scandal has reached a new level: Now prosecutors have their sights set on bank employees who may have helped their rich clients use Liechtenstein to avoid paying taxes. Perhaps they didn't just help move money across borders -- it's rumored that German banks ran certain foundations in Liechtenstein in order to help their account holders slip past the German tax authority."

"Now that banks or their employees are under suspicion, the scandal has taken on a new dimension. In the early stages of the crisis, the economic elites tried to portray the tax evaders as isolated cases. Now it appears that these individual acts of misconduct were part of a systematic effort to avoid taxes in a conspiracy against the state. Such a thing was always suspected, but there was never enough evidence."

"Until now, German banks have managed to distance themselves from this affair. But they can't do that any more. To rescue their credibility, they'll have to make sure these 'tax oases' dry up."

Business-oriented Financial Times Deutschland stands up for its subscribers:

"In the debate over law-breakers among the German elite, a popular consensus is developing: It's about a new detachment."

"As society drifts ever further apart, as the income gap widens and the lives of those at the top and bottom of the income ladder become ever more separate, the argument goes, the elites have lost their moral compass. They no longer feel bound by law. …"

"The problem is that this theory has more to do with amateur psychoanalysis than convincing evidence."

"It's undeniable that the social separation between the leaders of the business world and the simple employees has grown dramatically. With global capitalism, the boss doesn't walk through the factory gate each morning with everyone else -- instead he's more likely to live and work on a whole different continent."

"This is a big problem for politics and business leaders alike. But to argue that the management class is more inclined towards criminality is pure speculation."

Center-right Frankfurter Allgemeine Zeitung tries to keep things in perspective:

"When it comes to taxes, Germany's gone topsy-turvy: Politicians are calling business leaders scum."

"Hundreds of criminal investigations are being put on hold as investigators chase after a small number of guilty parties. The state must pay to catch tax cheats. And a tiny tax haven is being described in terms German politicians rarely use to refer to rogue states with nuclear weapons. The enemy is in Vaduz (tiny Liechtenstein's capital). It's no wonder that the German intelligence service is on the case."

"All this is in remarkable contrast to the real role of taxes in everyday life. Everyone knows false returns are illegal. But the fact that tricks are allowed is evident from the masses of advice books and huge tax advisor industry -- part of which belongs to banks. All sorts of lobbyists make the state out to be a robber baron, the tax burden as oppressive and unfair. People work half the year for the state before making money for themselves."

"It would be too clumsy to see in all this a justification for tax evasion or gray-market work, though lots of people in all walks of life, including judges and lawyers, have been known to. At fault are the rules themselves. When regulations aren't easily understood or are totally contradictory, acting within the law can be a matter of luck. Equally important as a basis for cohesive society is the expectation that everyone will respect the rules."

-- Andrew Curry, 12:45 pm CET

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