Updated: 04/08/2013 00:43 | By Agence France-Presse

France ups the ante in EU tax evasion battle after scandal

France said Sunday it was looking to tighten Europe-wide measures against tax evasion as it scrambles to contain a fraud scandal that has rocked President Francois Hollande's government.


France ups the ante in EU tax evasion battle after scandal

French Finance Minister Pierre Moscovici answers journalists questions on April 4, 2013, in Strasbourg, France. France said Sunday it was looking to tighten Europe-wide measures against tax evasion as it scrambles to contain a fraud scandal that has rocked President Francois Hollande's government.

The move comes as Jerome Cahuzac -- the former budget minister who triggered the scandal last week when he revealed owning an undeclared foreign bank account -- faced fresh allegations of tax fraud.

Finance Minister Pierre Moscovici announced that France would seek to reinforce the exchange of banking information throughout Europe, based on a US ruling in place since 2010 that seeks to fight offshore tax evasion.

The so-called US Foreign Account Tax Compliance Act (FATCA) requires foreign financial institutions to provide the IRS tax agency with information on accounts held by American clients, such as withdrawal and payment amounts.

"I propose that there be an automatic exchange of information, a European FATCA," Moscovici said on Europe 1 radio.

Hollande's government has been shaken by the scandal, which erupted Tuesday after Cahuzac -- once in charge of tackling tax evasion -- admitted to investigators that he had a foreign account containing some 600,000 euros ($770,000).

Cahuzac -- who resigned on March 19 after prosecutors opened a probe into the account, first revealed by the Mediapart news website in December -- had repeatedly denied its existence to the president, in parliament and in media interviews.

Further fanning the flames of the scandal, the Zurich-based Tages Anzeiger newspaper reported over the weekend that Cahuzac had lied to a bank about the 600,000 euros when he had them transferred from Switzerland to Singapore.

According to the newspaper, he presented a "bogus" certificate to the Singapore branch of a wary Julius Baer bank, purportedly proving that his money had been declared to tax authorities.

Swiss broadcaster RTS also reported Sunday that Cahuzac had tried to place 15 million euros with a fund management firm in Switzerland, which refused the money for fear of future complications, "Cahuzac being a politically prominent figure."

The former budget minister's lawyer, however, told AFP the RTS report was "not credible."

Critics have been quick to round on Hollande and his ministers, accusing them of either trying to cover up the scandal or of mismanagement for having believed Cahuzac's denials.

Many have called for a government reshuffle -- a move that was rejected by Hollande and Prime Minister Jean-Marc Ayrault last week.

On Sunday, former foreign minister Alain Juppe also entered the fray, saying Ayrault's government "no longer has credibility."

"A reshuffle, yes, but only if there is a change in policy," he said on TV channel Canal+, pointing to an "extremely serious" economic situation.

In a survey published Sunday in the Journal du Dimanche newspaper, three in five respondents said they were in favour of a reshuffle over the "Cahuzac affair."

A majority of the more than 1,000 respondents also said the scandal had had a negative impact on Ayrault, his government and on the president himself.

Hollande has tried to contain the fall-out from the scandal, saying he was unaware of the account and announcing Wednesday that a new law would be submitted within weeks that will establish greater control over ministers' wealth.

The law would also ban any elected representative found guilty of tax fraud or corruption from holding any form of public office.

"Everyone is going full tilt to produce a (legal) text as quickly as possible," one governmental advisor said on condition of anonymity.

On Sunday, Moscovici also announced that France and Germany -- which has said it will strengthen its fight against tax evasion -- would soon put forward a proposal with regards to money laundering, without elaborating.

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