Last night’s Four Corners program  highlighted the exploits of Heinrich Kieber  the thief who stole the tax secrets of many international billionaires and sold them to various governments around the world.

Kieber is now one of Interpol’s most wanted men. He has been granted witness protection by the German Government and is in hiding due to the international effect of his theft of tax information from the LGT Bank in Liechtenstein. Australia’s second richest man Frank Lowy is caught up in the international intrigue of the Kieber case but denies any wrongdoing.

What Four Corners failed to tell the Australian people last night was that the tax office is losing the battle against Australians hiding their money and assets in tax havens. This is because of the havens’ secret banking and tax regimes. It’s as simple as this. The ATO has identified 33 tax havens in the world. But we have only signed three Tax Information Exchange Agreements (TIEA) with other countries.

TIEA’s aim to establish effective information exchange and improve transparency of taxpayers’ financial arrangements/transactions for tax purposes. Twelve months ago the liberal government said they were negotiating with a further seven tax havens believed to be Jersey, Guernsey, the Isle of Man, the British Virgin Islands, the Cayman Islands, Anguilla and Granada. However, none have been signed since the change of government and it appears the Rudd government is dragging the chain with this.

Even if we sign another seven agreements that takes the total to 10 havens covered by an agreement, well short of the 33 ATO identified tax havens. You could say the tax office is pissing in the wind as it fights an uphill battle to win against the highly secretive banking and tax regimes of tax havens.

The tax office say it is coming down hard on people who hide money in tax havens but the facts tell a different story. John Passant, a former Assistant Commissioner of Taxation (International Strategy and Operations) who retired in June this year told Crikey: “The number of staff in International Strategy and Operations (ISO) has gone from around 164 in 2004 to about 85 today. When I was an Assistant Commissioner in ISO we had 164 and argued to go to 210 to do our job properly. Our reward (in response to efficiency dividends and other cuts), was to be cut to 148, then to 129, then further over time.”

“The ATO makes a lot of mention of exchange of information. It has how 2 or 3, or maybe 5 staff in that area. How can you analyse, digest and act on the exchange of information with so few staff.”

“The recent Liechtenstein discovery doesn’t inspire much confidence either. A disgruntled employee sells details of a Liechtenstein bank’s information to German and other tax authorities. Australia has exchange of information clauses in treaties with those other authorities. This is reactive, not proactive. I would have hoped the ability of the ATO and its fraternal agencies around the world would be such that they prevent these apparently widespread abuses.”

Peter Fray

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