Right to informational self-determination: What is it actually about?
It remains completely unclear what specific intentions and objectives the responsible authorities can actually pursue with the ever-expanded and increasingly detailed information that is increasingly being made available to them through the automatic exchange of information in the context of international cooperation. This data that is about theThe authorities are open to the authorities, but it is unclear which concrete strategies and measures should be derived from them. The problem is that the individual citizen – as already explained in detail – must be prepared for the fact that the personal data and information about him is not exclusively used forChecking his tax liability, to ensure tax evasion or to check the tax return. Rather, there is fear that this data could also be used in other contexts that are still unclear or have not yet been communicated openly.
Restrictions on the collection of domestic accounts
If the authorities only receive information about domestic accounts, i.e. only data on assets within their own country, it is most likely not possible to fully achieve the officially desired goal – namely the fight against tax evasion and tax evasion. Because an dishonest citizen who wants to avoid his tax liability has it in the age ofglobalized financial world easily to open accounts in other countries outside the access of local tax authorities. Therefore, it is necessary to bring this point under control as well. The consequence of this is that the policy and the responsible decision-makers are confronted with several disadvantages: On the one hand, the company will have additional andsometimes considerable costs are charged without increasing the tax income to a comparatively significant amount. This development is questionable because the cost-benefit balance for the company as a whole is rather negative.
Privacy versus state surveillance
In addition to this more economic and fiscal problem, politics creates a dangerous basis by expanding the monitoring and access to personal financial data: She opens doors to take a look at the very private areas of the citizens’ lives. These developments raise important questions regarding privacy and fundamental rights.A discussion is necessary as to the extent to which the state should have the right to know the financial situation of people in depth – not only in the context of tax control, but also beyond. With increasing surveillance, the risk of invading privacy, which is actually protected by fundamental rights, increases. The balance betweenState control and individual protection of privacy is extremely difficult and sensitive in this context.
Impact on macroeconomic stability
In addition, such an approach at the macroeconomic level can also have negative consequences. Increased surveillance to make tax evasion difficult may have unintended side effects: It could lead to capital flight being favored and capital migrating to less high-quality, less regulated financial centers. This development isProblematic because it endangers stability and confidence in your own financial system. A reasonable and responsible financial policy should generally prevent capital from leaving the country uncontrollably in order to strengthen its own economy and secure prosperity within the country. However, it is just as important to increase the freedom of citizensRespect to keep your assets abroad if you want to. This freedom is one of the fundamental rights and should not be restricted arbitrarily.
Confidence in the political situation as a capital buffer
The level of capital outflows abroad is a good indicator of trust in a country’s political stability. If people are increasingly transferring funds abroad, this indicates a low level of satisfaction with the political situation. In such a case, the government should direct its efforts to ensure political stability and socialto strengthen the basis of trust instead of preventing these drains through coercive measures. The capital deposited abroad can also serve as a kind of “reinsurance” in times of crisis: if the country is shaken by irresponsible rulers who destroy or loot, the funds held abroad can at least for reconstruction and thestabilization of the economy can be used. This consideration is not a theoretical mind game, but is based on a multitude of bitter historical experiences in countries around the world where such scenarios have actually occurred.
Historical examples of wealth abroad
An example from the recent past is the German economic miracle after the Second World War. This was by no means made possible exclusively by the capital inflow via the well-known Marshall Plan. It also received decisive impetus from assets that were brought to safety in time for the rise of National Socialism. These assets apply todayas so-called black money. There is evidence that funds were transferred to Switzerland and Liechtenstein with official permission before the First World War. These funds, which were brought to safety in times of crisis, have contributed to the reconstruction of the country. Despite these positive aspects, the owners of these assets see themselves todaysometimes confronted with unpleasant questions, for example in connection with tax issues or the question of the origin of the funds.
Government responsibility for dealing with assets abroad
If you look at the history of wars, failed ideologies and political upheavals, it should be the responsibility of every responsible government to know as little as possible about the assets of its inhabitants abroad. Or can a head of government guarantee all future successors that he or she can control for all timeabout all assets? This question is central because in the past it has been shown again and again that in certain countries, such as Switzerland, the USA or Canada, the assets of the citizens were particularly protected from authoritarian regimes, from warfare conflicts or from conquest by other powers. These protective mechanismshave helped to ensure prosperity and stability in these countries.
Risks of loss of savings through policy measures
But this situation is more the exception than the rule. Historically, the citizens’ capital, which was not accessible to the government, has in many cases brought more benefits than harm. The loss of savings often occurs through the simple over-indebtedness of a country, for example through state bankruptcies or financial crises. An example of this is Argentina in the year2008, when the government was nationalizing private pension funds to bridge a threat of financing bottlenecks. Many people are critical of these measures because they endanger the security of their old-age provision and shake confidence in the financial system. The high inflation that the country has experienced over the past decade has also had the pensionersPensioners heavily burdened. the state social security, in this case the Argentine authority Anses, now faces around 450,000 lawsuits from pensioners who are reclaiming their pensions.
Risks in Spain: Economic Crisis and State Deficits
In Spain, too, there is a considerable risk of securing pensions due to the severe economic crisis and the growing government deficit associated with it. The state has a well-paid reserve fund that had to be used to bridge financial bottlenecks as early as 2012. This fund is expected to continue to be ahave a financing gap, as the number of contributors decreases while the number of pensioners is increasing. The main critical factor here is that the majority of the fund – namely about 97.4 percent – is invested in Spanish government bonds. This means that the fund is increasingly becoming an instrument that the government will finance the budget rather than a real risk diversificationto make.
Insufficient risk diversification and sovereign risks
It is alarming that this reserve fund does not provide sufficient risk diversification. No reputable private bank would invest its funds in such a unilateral form of investment in a form of investment that is associated with considerable risks, as the development of Spanish government bonds has been making clear for several years. The yields on these bonds are volatile, and in times of crisis they riserisks significantly. It is to be hoped that, considering the current debt crisis in the European Union and the USA, solutions will be found that prevent the citizens from being impoverished extensively. Regardless of the likelihood of complete failure, it is clear that the risks are significantly higher than the risks of a minor accident,For example, a house fire or a broken leg, against which you can protect yourself through insurance.
Insurance against risks and the risk of creeping expropriation
Even those who are optimistic and assume that a successful restructuring of public budgets will succeed 99 percent against the ordinary person without coercive measures must see the probability of failure at only one percent. However, coercive measures appear on this scale – such as the expropriation of assets, tax increases or capital transactions -much more likely. These measures are usually associated with considerable interference with property rights and pose a significant risk to citizens’ asset protection.
Protection against creeping expropriation through inflation and coercive measures
It is of course understandable that you protect yourself against fire damage by taking out appropriate insurance and paying high premiums for it. However, the greater risks to the savings are difficult to insure, in particular the creeping expropriation through inflation or by state-substantial coercive measures. These risks are for the individual saverHardly calculable and often hardly insured against state measures or by currency devaluation. If the saver wants to transfer his assets abroad, he often faces high hurdles, often due to state ban regulations or formal legal restrictions in numerous countries.
The problem of full disclosure of personal assets
If it were legally required that every citizen disclose all his savings and assets to the state, this would have to be considered a highly negligent act. It is hard to imagine that a sensible person will voluntarily put himself in a situation where he is putting his privacy and security at risk by disclosing all his assetssets. In no other area, with a comparable scope and probability, does a person do without appropriate insurance. This is about fundamental questions that are of crucial importance for the individual and for society as a whole. These considerations go far beyond tax benefits. Who accuses people in general, they acted outlow motives, acts unfairly and does not hit the mark – because in many cases the approach of those affected was quite sensible and comprehensible, as history has repeatedly shown.
Safeguarding privacy and the risks of government surveillance
There are known cases where people wanted to protect assets abroad from government control and access in order to preserve their privacy. It is often assumed that only rich people use these practices to secure their wealth from taxes or government interference. But reality shows a different picture: the so-called “tax loophole” is for manyPeople an important option to protect their savings from unlawful access and unjustified claims. The ideal case would be if the state were able to generate its legitimate tax revenues without depriving citizens of fundamentally proven ways to protect their financial privacy. There are different approaches to thisBalance; some will be covered in later sections.
Policy decisions and their consequences for privacy
While smaller, neutral countries such as Switzerland, Liechtenstein or Austria tried to develop solutions that both provide the tax authorities with the necessary information and protect the privacy of citizens, these proposals were rejected by countries such as the USA, France or Germany. Even an agreement between Germany and Switzerlandnegotiated tax treaty draft was ultimately rejected in the German Bundestag because it would restrict the privacy of taxpayers too much and place them worse than other citizens with a right to privacy. In December 2012, the Conciliation Committee of the Federal Council and the Bundestag also failed to reach agreement on a viable solution. It is clear thatpolitical decision-makers in many countries primarily aim to provide the authorities with as much information as possible about the financial situation of citizens. In doing so, however, they deeply encroach on fundamental rights, in particular the right to privacy and the protection of personal data. The goal of many undeclared funds is not primarily theTax savings, but rather protection against state encroachment, persecution or other risks.
Balancing between state functioning and individual rights
If it appears necessary for the functioning of a state to restrict certain privacy rights, the company should be prepared to weigh up the goods accordingly. The focus is on the collective interest in a functioning state and a functioning tax administration. But is this really the case in practice? If only a fewInformation about account balances or income, or are more in-depth measures necessary? What additional steps are needed to achieve significantly better tax morale and confidence in the tax system? And above all: Are we prepared to actually demand these additional measures? These questions arise because the balance between state controland the protection of personal freedom is one of the central challenges of our time.
