Hans-Rudolf Merz, Ministre suisse des Finances
Buoyed by an exceptionally healthy 2006 balance of payments, Mr Merz talks about the difference of opinion between Switzerland and the European Union (EU) on the subject of corporate taxation, and addresses the issue of banking secrecy.
Commerce International: How do you explain the European Union’s position on tax regimes in the Swiss cantons in view of the fact that there is no contractual obligation for Switzerland to harmonise its corporate tax rates with those of EU member states?
Hans-Rudolf Merz: “As you correctly point out, Switzerland has not signed any agreements with the EU obliging it to harmonise its corporate taxation systems with those of the EU and its member-states. EU competition rules are not applicable to Switzerland, since the country is not a member of the Union. Meanwhile, the Free Trade Agreement only covers trade in certain goods. Cantonal provisions on corporate taxation are not part of its field of application. Regulations are guaranteed by the constitution and are not discriminatory, since they apply to both Swiss citizens and foreign nationals. The criticism levelled at Switzerland is without legal foundation and should be understood in the context of ever more intense economic competition. Such compet-ition forces countries to provide favourable economic conditions and an attractive framework for business. In this regard, corporate taxation, like other factors, plays an important role. It is understandable that the countries doing best in this competitive context are the ones that receive the most criticism.”
C.I. : What arguments would you use to counter French critics, particularly Arnaud Monte-bourg, who complain that Swiss corporate taxation is too low?
H-R.M: “Switzerland is a sovereign state. Based on the rule of law, our political system is upheld by democratic principles. In the field of taxation, the recurring question is what goals can the state reasonably set itself and what taxes can it levy on citizens and businesses in order to achieve those goals.”
C.I. : In your January 2007 meeting with the Luxem-bourgeois Finance Minister, Luc Frieden, you took the opportunity of highlighting the two countries’ many shared interests. What are the most important of those interests?
H-R.M: “The Swiss and Luxembourgeois financial markets both occupy an enviable position. The fact that they are in competition in this area does not prevent Switzerland and Luxembourg from maintaining excellent relations. The two countries are convinced that competition is a welcome factor which in no sense constitutes an obstacle to good relations. That is why, through the international organisations concerned, they attempt toensure that the spirit of competition is not compromised by excessive attempts at harmonisation, but left to develop as a force for renewal.”
C.I. : Could you tell us something about the recognition and maintenance of banking secrecy, concerning which, not only Luxembourg, but also Austria and Belgium, now share Switzerland’s position. You maintain that “protecting the private sphere from excessive state control is very important.” Could you elucidate your views?
H-R.M: “Banking secrecy, which is a specific form of professional secrecy, is based on a relationship of trust between clients and their banks, the same kind of relationship that exists between lawyers and their clients and doctors and their patients. It is a right to privacy. I don’t believe in a society in which citizens are subject to round-the-clock surveillance. That isn’t my kind of society, because it’s not a liberal society. Switzerland has always chosen the path of liberalism, and it has always led to success. The choice rests on three pillars: liberty, responsibility, and sanction. Of course, in certain circumstances, protecting the secrecy of the client-banker relationship can enter into conflict with other important considerations. That is why banking secrecy should never be beyond question. All states should define the conditions and circumstances justifying coercive intervention in this relationship of trust, because there is no overwhelming international consensus in this area. Swiss tradition demands that the state should show a degree of restraint. But clearly, when it is a question of fighting crime and the financing of terrorism, banking secrecy should be lifted.”
C.I. : What are the other major priorities for the Swiss Ministry of Finance in the coming months?
H-R.M: “First of all, we will be systematically pursuing our efforts to balance the Swiss federal budget. In the next few years, we want to use surplus income in order to stabilise the Confederation’s debt. We are making good progress. In fact, the 2006 balance of payments produced a surplus of 2.5 billion Swiss francs, which enabled us to substantially reduce the national debt which, thanks to extraordinary revenue, has diminished by 5.7 billion Swiss francs. We also want to pursue reforms in the fields of corporate taxation and income tax. The VAT system in particular must be radically simplified. Lastly, we must strengthen the position of our financial markets by introducing competitive regulations.”
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