Economic and financial section > Double taxation and tax evasion

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how desirable it would be to check these practices, we have not felt called upon to recommend
any special measures.
We are also aware of the difficulties and objections which may be raised to all measures aimed
at combating tax evasion; we shall examine the principal ones, and shall thus be able at the same
time to offer a commentary on the text of our resolutions.
The first criticism passed on the existing convention between France and England is that
it increases the mischievous consequences of double taxation on account of the conflict of laws
in respect of domicile. “The mutual interchange of information may thus, in some cases, bring,
quite correctly under existing law, the whole of a personal estate under liability to taxation in
both countries” 49.
To this objection, which may be made both in respect of income-tax and succession duties,
it may be replied that the proposed resolutions form an indivisible whole, and that their object
is to prevent both double taxation and tax evasion. The foregoing criticism will be seen to
furnish a fresh proof of the close connection between these two problems.
A second objection is based on “the inviolability of banking secrecy”. The fact cannot be
disguised that public opinion in many European countries does not accept the idea that public
officials should have power to require information from a third party concerning a taxpayer’s
personal estate, and that these officials should transmit such information to another State. It
will be remembered in this connection that the Genoa Conference of 1922, when it requested the
League of Nations “to study the question of measures for international co-operation to prevent
tax evasion”, made a reservation to the effect that “any proposal to interfere with the freedom
of the market for exchange or to violate the secrecy of bankers’ relations with their customers is
to be condemned”.
We are fully aware of the importance of the part played by banks in economic life, and in
putting forward our resolutions we have endeavoured to avoid hindering their activities and to
preserve as far as possible the secrecy of their operations, as is shown by the following considera¬
tions, to which some of our number attach more weight than others.
In the first place, it is only a question of the exchange of information between officials who
are themselves bound by the strictest rules of professional secrecy. In many countries it is the
usual practice for employers to declare to the revenue authorities the amount of the salaries they
pay to their employees, workmen, etc., which is perhaps as confidential as the amount of dividends
received, or even the total of a deposit account in a credit establishment. There is no reason to
suppose that secrecy would be violated by the revenue authorities; in practice, moreover, the
transmission of information should be accompanied by every conceivable precaution against
leakage.
Secondly, it is not a question of relations between bankers and their clients in the strictly
economic and banking sense of the term. Handing share and bond coupons over a counter,
filling in a counterfoil or list of securities, paying a customer the value in money of such interest
or dividends as have previously been paid in or will be paid in later by the corporate trading body
issuing the security, cannot be said to involve on the part of the bank any estimate of the financial
position of the customer or, on the part of the customer, any confidence in the ultimate solvency
of the bank, which acts as an intermediary. The position is different in the case of sums left on
deposit or current account.
However, having regard to the importance of the objections, we have sought to indicate in
the actual wording of our resolutions the great care which should be displayed in acting on the
lines of our suggestions. In the second preliminary observation we point out that we make our
recommendations as technical experts, and go on to state that “it will only be possible to cany out
49 See Document F. 7, No. 6, page 17, Sect. 12.