Tired of being stiffed by tax evaders while facing financial woes at home, more than 50 countries have signed onto a deal designed to cut down on evasion, the WSJ reports:
This week’s agreement in Berlin, under the auspices of the Organization for Economic Cooperation and Development, will now force governments to collect and exchange information on taxpayers’ assets and income outside their home country, including bank accounts, interest payments, bank balances, and beneficial ownership.The financial and sovereign-debt crises of the past half-decade have prompted leading industrialized countries to redouble efforts to counter tax fraud and evasion in the digital age. The German government, which for decades chased its citizens’ undeclared bank accounts in Alpine neighbors like Switzerland and Liechtenstein, is among the countries leading the charge.
Good news, as exploitation of offshore banking centers is something that big companies who can afford expensive legal and financial service can manage, while ordinary Main Street businesses have to pay up.However, this does not disguise the reality that inefficient governments, unsustainable retirement programs and wasteful spending keep the western cost of government ruinously high. Stupid countries and opportunistic politicians will pump any revenue raised by this measure into their existing systems without reform. Smarter countries with serious people in charge will use the money to cut tax rates or to invest in government efficiencies and reforms that make states work better and cost less.