Economic and financial section > Double taxation and tax evasion

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these recommendations in any given country if public opinion in that country is sufficiently
prepared, and if the Government of the country considers that the measures advocated are
compatible. . . with public opinion”.
Thirdly, one of our number expressed himself apprehensive on a certain point. He said that
tax supervision in his country worked excellently, thanks to the patriotism of the people, who
understood that the system of collection at the source, the communication of documents to the
revenue officials and all other administrative measures were conceived and applied in the interests
of the national exchequer. If, however, they believed that such information would be utilised
for the benefit of the exchequer of another State, he thought that his countrymen (bankers,
employees in business houses and officials alike) would be less ready to accept such measures,
and this attitude might react prejudicially on the collection of taxes in the country itself.
In order to meet this objection, we have been careful to say in our second preliminary
observation that “the carrying out of our recommendations will onlv be possible in any country
it the Government of the country considers that the measures recommended are compatible. . .
with the system employed by the said Government for the collection of its own taxes”-.
Ihere remains a fourth difficulty, the most serious of all. Suppose that two or three, or
even five or six, countries conclude with one another a convention on the lines indicated, and that
the transmission of information succeeds to the satisfaction of all. Has the problem been really
solved ? Not entirely; for in each country, although the system is complete as regards the
other contracting countries A, B, C, and D, it is not so intrinsically. There is nothing to prevent
the taxpayer from transferring his securities to yet another country which has not concluded any
convention with the countries A, B, C and D; and, in spite of the barriers to exportation which
may be set up by the countries A, B, C and D, that country will become, if not a convenient
refuge, at least a possible haven for unscrupulous taxpayers.
1 his objection undoubtedly falls to the ground if it is pushed too far. It would be an exag¬
geration to say that, if there were a single country outside the various conventions against tax
evasion concluded by the rest of the world, everything previously achieved would be rendered
nugatory. Nevertheless, reduced to its real proportions, the difficulty remains a serious one.
If only two or a few States conclude an agreement, there is some danger of a flight of capital with
the object of avoiding taxation.
Notwithstanding this, however, we felt that we ought to suggest appropriate remedies
to deal with evasion in connection with the assessment of taxes. But in order to mark the
importance of this point, we have prefaced our text by an observation which forms an integral
part thereof, and which we venture to quote: “The question of fiscal evasion can only be solved
in a satisfactory manner if the international agreements on this matter are adhered to by most
of the States and are concluded simultaneously. Otherwise the interests of the minority of
States which would alone have signed the conventions might be seriously prejudiced”.
It remains to explain the penultimate paragraph of our resolution. We were unanimous
in recognising, in principle, that, to secure the effective suppression of tax evasion, there should
be a general and complete exchange of information necessary to the assessment of taxes. Never¬
theless, in view of the fact that the legislation of a great number of countries does not as yet allow
the revenue authorities to obtain certain information, whether it be from the taxpayer himself,
or a third party; that public opinion in different countries is opposed to any extension of the
powers of the revenue authority in this sphere; that, consequently, it would be difficult at the
present time to secure any alteration of the law in those countries; and, finally, having regard
to the considerations set out in the preceding paragraphs, we have to recognise that the
exchange of information should actually be limited to that in the possession of States or which
they can obtain in the course of their administrations. This is the first step in the struggle
against tax evasion.