Le Temps a Swiss newspaper published an interview with Laszlo Kovacs over the weekend. Mr Kovacs is the European Commissioner for Finance. In the interview he states that he believes that Belgium is ready to revoke banking secrecy for taxation matters and that Luxembourg and Austria will therefore follow suit. He further seems to think that Hong Kong, Singapore and Macau will be happy to agree to information exchange on the accounts of EU tax residents. As for Switzerland which has signed the savings tax agreement with the EU, the fact that this agreement is meant to stand until 2013 is dismissed by Mr Kovacs in the interview as reported. He states that: “The agreement is to be reviewed every three years. I do not see why we should wait until 2013. Harmonisation should certainly be in place before that date.” By harmonisation, he means that the offshore centres that have agreed to impose a withholding tax on EU citizens’ accounts (and those that have not made an agreement so far) will agree to exchange of information on accounts held by EU tax payers. Mr Kovacs seems to be unaware of the strict regulatory regime in Switzerland and believes that the country is host to funds that result from what he refers to as “criminal activity”. He also seems to believe that, if Belgium does agree to information exchange, and Austria and Luxembourg follow suit, the pressure will then be on Switzerland to join in – and that it then will simply give in. That is a step further than many can imagine. Having spent time in Luxembourg financial establishments this correspondent cannot imagine that they will agree to exchange of information just because Belgium does. The same could be said for Austria. In Switzerland, reaction to Mr Kovacs opinions seem to vary between official stoicism – “All we say in these cases is that Swiss Banking Secrecy is not being given up,” a spokesman for the Swiss Federal Department of Finance told WealthBriefing – to mild amusement. The Swiss Bankers’ Association representative noted that banking secrecy still has massive support in the country with 80 per cent of voters supporting it. “This is a matter for Swiss Law, not EU dictat,” the association told WB. “The EU commission works by directive with a fair degree of lack of accountability. Switzerland is a direct democracy.” So if Mr Kovacs wants the Swiss to change their law, maybe he would be better trying to explain to them the benefits of their so doing rather than making sweeping (and rather far fetched) statements about the future of offshore finance. So long as there are high tax regimes as exist in Europe, there will be tax havens. In the end it is in the interests of the EU to have well run, compliant offshore centres close by operating a withholding tax regime rather than trying to chase and enforce agreements with a set of brass plaques based in Pacific atolls. Of course the other solution would be for the EU to lower taxes to reduce the incentive that they so clearly feel they create for people to avoid paying tax at the current rates.