Tax, Taxes & the IRS

[NYBob]

EU says it could sanction tax havens -
2 minutes ago
By AOIFE WHITE
AP Business Writer

(AP:BRUSSELS) The European Union could penalize any nation that refuses to share information on tax evasion and money laundering as part of a wider push to tighten financial supervision, the EU Commission President said Wednesday.

This includes the possibility of new fines against anyone breaking financial market rules within Europe.

The EU said it would call on a G-20 meeting of the world's leading economies on April 1 and 2 to draw up a list of "uncooperative jurisdictions" and lay out what could be done to curb them.

European Commission President Jose Manuel Barroso said "it should be possible for us to apply penalties" against countries that don't cooperate with European tax authorities or financial supervisors.

"Banks should be dissuaded from operating in offshore centers through increased prudential requirements and tougher transparency rules," an EU paper said.

Barroso said the EU would also call on other nations to bolster international oversight of banks and reform financial institutions to include emerging nations and strengthen the powers _ and the funding _ of the International Monetary Fund.

One concrete move the April summit could achieve would be a joint push for more credit for exporters and importers, he said. Traders complain that the crisis is hitting them hard and hurting trade as one of the main drivers of economic growth.

But Barroso said the EU could not wait for the world to reach agreement on a sweeping reform of the financial industry and it had to move swiftly now to reform oversight in its 27 nations.

The EU executive is asking EU leaders at a summit on March 19 and 20 to back a "robust reform to remedy known weaknesses" and prevent future crises. It wants the EU government leaders to give the green light for the reforms.

It will propose new rules on banking supervision by the end of May and new laws for hedge funds, private equity funds and executive payments by the end of April.

Barroso wants tighter rules for banks whose pay structures push executives and traders to take high risks for the promise of higher personal bonuses.

The Commission said in a paper that pay and bonuses have often been "inappropriate and too orientated toward excessive risk-taking" and shareholders rarely had the chance to check this.

The Commission proposed to give supervisors the power to impose "capital sanctions" _ by setting higher reserves aside _ if their pay and bonus structure "is found to generate unacceptable risk."

"If financial institutions are to earn back the trust and confidence of the European investors and businesses, action must be taken on corporate governance and remuneration structures," the paper said.

In June, the Commission will lay out legislation on how much and what kind of capital banks should set aside to trade the complex securities that triggered the lending freeze last year. Banks stopped lending when they could no longer trust the value of securitized investments _ investments that resell debt such as the U.S. subprime housing loans that have slid in value.

It said it would also try to learn lessons from the multibillion euro (dollar) pyramid fraud operated by U.S. financier Bernard Madoff and would suggest reforms to securities trading _ which could change or clarify the responsibilities of banks that place money with other funds.

In the autumn, the Commission will look at "more effective sanctions" _ including hefty fines _ against groups or individuals that break financial market rules. It will look at improving investor protection rules and set out guidelines on more responsible lending and borrowing.

EU regulators said they would also examine ways to ensure that homeowners are given alternatives to foreclosure to prevent them losing their homes.

They are calling for a European agency to oversee the financial system as a whole, to watch problems and to provide early warnings _ but did not specify whether it would set up a new body or ask the European Central Bank or other institutions to take that responsibility on.

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