European Union finance ministers failed once again Tuesday to agree on a sweeping new policy to fight tax evasion because of resistance from Luxembourg, a tiny country that long has prospered from a secretive banking culture.
EU Taxation Commissioner Algirdas Semeta said their failure was disappointing because, if approved, the legislation proposing an EU-wide automatic exchange of data on bank deposits would allow governments to “identify and chase up tax evaders.”
Luxembourg, a duchy of barely 500,000 people, was able to shelve the legislation for the 28-nation bloc and its 500 million citizens because the decision required unanimous approval at Tuesday’s meeting in Brussels.
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Luxembourg Finance Minister Pierre Gramegna said he could not vote in favour and pushed the decision to a summit of EU government leaders next week.
Luxembourg has insisted for years it would support the proposed law only if non-EU banking hubs within Europe, particularly Switzerland, also sign up.
But as the EU’s negotiations with Switzerland, Liechtenstein and three other nations on signing the agreement have made progress, Luxembourg has responded with new reasons for opposition, chiefly the risk that banks outside Europe would draw deposits away if the continent’s banking rules are tightened too much.