Antonio Foglia criticises the Common Reporting Standard (CRS), aimed at combating tax evasion. It was developed by the world’s major economies in response to the G20 request and approved by the OECD Council in July 2014. He is also highly critical of FATCA, which he sees as a paper tiger, enacted in response to outrage over a non-existent problem. Foreign Account Tax Compliance Act is a unilateral US tax law serves to curtail potential tax evasion abroad by US taxpayers.

The author says the “well-meaning technocrats” in the West demanded transparency, and set up “a program that could have dire economic consequences” in China. They have enabled Chinese authorities to use CRS, a global financial-disclosure system that “foolhardy” Western governments embrace, as a “tool of repression” against Chinese, who want to “stash some of their wealth overseas.”

According to UBS, a Chinese billionaire was minted every few days in 2018, and personal wealth in China surged to a record $24 trillion. “Tens of millions of Chinese residents hold an estimated total of well over $1 trillion in undeclared assets abroad.” The author, a banker himself, says “they now face the nightmare of being treated like criminals.” But some of them had been corrupt officials, whose family members are often tied to illegal acts, like laundering ill-gotten gains through real estate, restaurants and bars while in exile.

The sweeping anti-corruption crusade started by President Xi Jinping in 2012, which also saw a rush among corrupt officials and executives of state-owned enterprises to emigrate with their families. In 2014, China announced the start of a global campaign to hunt down fugitive former officials. Since CRS calls on jurisdictions to obtain from financial institutions information, which is automatically exchanged with other jurisdictions, China has started cooperating with roughly 100 jurisdictions.

The author says: “Unlike almost all other countries implementing the CRS, China did not introduce a voluntary disclosure scheme allowing people to declare previously hidden overseas assets and pay a penalty to avoid criminal charges. And fleeing China is no longer an option, given the harsh immigration restrictions that potential destination countries are implementing.” Since CRS rules came into force, wealthy Chinese are nervous. They fear an “economic purge” which allows the government to conveniently blame “tax dodgers” for “slower growth.”

It is amazing to see a Swiss banker putting guild interests ahead of ethics. “It is easy to dismiss the impact of CRS on wealthy Chinese as simply a problem for the rich. And most of the comments under one of the few news articles about the issue exude frightening xenophobic schadenfreude, rather than compassion for economic fugitives from a repressive regime.” It is “morally alarming” that migrant workers in many Chinese megacities, who live from hand to mouth, do not seem deserve the same “compassion.”

The author defends Chinese tax-dodgers’ right to hide “some of their wealth in safer jurisdictions.” Apart from privacy, political stability and security are reasons for their personal decisions. It is true that “the freedom to choose in which country to hold one’s savings has a deeper meaning than plain financial diversification.” And one has to remember that “these Chinese residents wanted to gain the very freedom that their government denies them – including the right not to have their destinies entirely tied to those of the country where they live.” By all means! As long as they are not criminals.

China’s fiscal policy may be “economically short-sighted,” as it could sink “these Chinese entrepreneurs’ lifeboats” and have a demotivating effect on innovation and creativity, “with potentially significant adverse effects on economic efficiency and growth.” Indeed, this is a problem that China’s 1.4 billion people need to tackle. If Chinese pay taxes, they are entitled to have a say in issues that matter to them.

"No taxation without representation" is a slogan originating during the 1700s that summarised a primary grievance of the American colonists in the Thirteen Colonies, which was one of the major causes of the American Revolution.