UCBH sem: Thibaud Giddey & Mikael Wendschlag “Tax system credibility vs. banking system reputation? Tax evasion as a system-threatening economic crime in 1970s Sweden and Switzerland”
- Date: –15:00
- Location: via Zoom
- Lecturer: Thibaud Giddey (Lausanne University) and Mikael Wendschlag (Uppsala University)
- Organiser: Department of Economic History / UCBH
- Contact person: Anders Ögren
In October 1972, Jacques Hentsch, son of a partner of the renowned Geneva private bank Hentsch & Cie, was arrested at the airport in Gothenburg, Sweden, for holding over 400,000 kronor in cash in his luggage. Undeclared export of capital was a crime under the currency act of the time, and the young banker was sentenced to a 4-month prison sentence. The cash belonged to the bank’s secret clients and was intended to be moved to Switzerland to avoid Swedish taxation. In this article, we investigate how this and other tax evasion cases in the 1970s affected policy debates in Sweden and Switzerland. In Sweden, which already had some of the highest tax rates at the time, these cases were seen as threats to the credibility of the tax system – which were met by increased efforts to find and prosecute tax evaders. The purpose was to maintain the tax system’s integrity and its objective of economic redistribution. In Switzerland, cases such as Hentsch contributed to a policy debate concerning the banking system’s integrity. Governments of other countries, not the least the US, were pressuring Switzerland to lift banking secrecy and to take a more collaborative approach to international legal assistance. However, with the international shift for policy liberalisation and financial deregulation in the late 1970s, the Swedish efforts to protect the integrity of the national tax system became increasingly difficult, while the Swiss efforts to maintain its secretive banking system succeeded. By the late 1980s, the Swedish tax system was reformed to reduce incentives for tax evasion while the Swiss banking system maintained its secretive character and grew as an international haven for wealth.