He bought tax CDs to combat tax evasion – and recovered over 7 billion euros in tax revenues. At the same time, he has earned a lot of praise and criticism. Now, the members of the SPD elected him as their leader alongside Saskia Esken: Norbert Walter-Borjans was Finance Minister of North Rhine-Westphalia (NRW) for the SPD. Kontrast.at spoke with him about tax CDs, criminal financial tricks and lobbying … and how social democratic parties have to evolve.
MR. WALTER-BORJANS, A FEW YEARS AGO YOU BROUGHT BACK BILLIONS OF UNPAID TAXES WITH THE SO-CALLED “TAX CDS”. HOW DID THIS HAPPEN?
Norbert Walter-Borjans: A contact person for whistleblowers came to me and said: “We have an offer from a whistleblower or a data provider. He said he had the relevant data, take a sample to see what’s up there.” When we evaluated it, the result of the sample already brought in far more money than the person wanted for his data. And I said I agree with that.
The “tax CDs” documented how 1,500 rich Germans deposited their assets via banks in such a way that they paid as little tax as possible for them. In 2012 Norbert Walter-Borjans bought such CDs for North Rhine-Westphalia. But the data itself was stolen. The names of the affected banks were not mentioned. At the beginning of December 2012, the state government in North Rhine-Westphalia confirmed that one of the tax CDs came from the major Swiss bank UBS and that the CD contained information on around 750 foundations and 550 other cases with an investment volume of more than 2.9 billion euros.
HOW MUCH DID IT BRING IN IN TOTAL?
Norbert Walter-Borjans: Everyone benefited from the tax CDs. On the CD were not only people from North Rhine-Westphalia, but also Austrians and people from other countries.
We paid 19 million euros and the wave of repayments that was triggered by this ultimately totaled 7.2 billion euros.
It can be divided into three blocks: 10%, that is 700 million, were those against whom the data medium could actually be used to investigate. The second group, that was 80%, i.e. over EUR 5 billion in repayments. These were people who were not even on it, but who, worried that they might be on it, reported themselves. The third block was that there was also information material on these data carriers and not just customer data. It was training material for bank employees on how to advise customers to cheat the state. There was evidence against banks. So banks also had to pay 800 million euros of fines. In international comparison this was a rather small amount, in other countries it would have cost the banks billions.
BUT YOU WERE STRONGLY CRITICISED FOR IT – WHAT DID YOU SAY TO YOUR CRITICS?
Norbert Walter-Borjans: An investigator who buys a packet of cocaine to blow up a drug ring would never be considered a criminal. One would say: Sure, if you can break the drug ring with it, then do it!
When it comes to financial products, we are dealing with a hermetically sealed-off scene that has been able to develop criminal financial products. No one could ever get their hands on it.
Unless you find people from inside this scene who end up betraying their cronies.
WHAT DOES IT DO WITH A SOCIETY WHEN SO MANY PEOPLE STEAL FROM RESPONSIBILITY WITH TAX TRICKS?
Norbert Walter-Borjans: The saying “If everyone thinks of you, everyone thinks of you” doesn’t work. In truth, this only leads to the fact that above and below it is running further and further apart. This has consequences that few people really realize.
NEVERTHELESS, TAX POLICY OFTEN REMAINS ABSTRACT. IT RARELY BECOMES REALLY TANGIBLE. HOW DO YOU GET MORE PEOPLE TO UNDERSTAND TAX POLICY AND DEMAND A DIFFERENT VERSION OF IT?
Norbert Walter-Borjans: Lobbies have an interest in telling the majority of people that they pay excessively high taxes. With a few figures and statistics, they give them the feeling that “I have to give more than half of what I earn to this state”. This is also a form of propaganda. So you first have to credibly show how high the levies actually are?
In my time as finance minister I enclosed a letter with the tax assessment. In this letter we described what we financed in the state with the amount that someone paid in taxes. So I develop a feeling for it
With financial products, we are dealing with a tightly sealed off scene that has been able to develop criminal financial products. No one could ever get their hands on it.
Except when you find people from inside this scene who end up betraying their buddies.
WHAT DOES IT DO WITH A SOCIETY WHEN SO MANY PEOPLE STEAL FROM RESPONSIBILITY WITH TAX TRICKS?
Norbert Walter-Borjans: The saying “If everyone thinks of himself, everybody is thought of” doesn’t work. In truth, this only leads to the fact that the poor and the rich are running further and further apart. This has consequences that few people really realize.
NEVERTHELESS, TAX POLICY OFTEN REMAINS ABSTRACT. IT RARELY BECOMES REALLY TANGIBLE. HOW DO YOU GET MORE PEOPLE TO UNDERSTAND TAX POLICY AND DEMAND A DIFFERENT VERSION OF IT?
Norbert Walter-Borjans: Lobbies have an interest in telling the majority of people that they pay excessively high taxes. With a few figures and statistics, they give them the feeling that “I have to give more than half of what I earn to this state”. This is also a form of propaganda. So you first have to credibly show how high the duties actually are?
In my time as finance minister I enclosed a letter with the tax assessment. In this letter we described what we financed in the state with the amount that someone paid in taxes. So people develop a feeling for what is actually done with this money.
In Germany, the feeling is otherwise created that the taxes I pay all happen to go to Berlin Airport, which never finishes. And then it suddenly feels fair not to pay taxes. So it’s about telling people understandably: How much does a police car cost, how much does a kindergarten place cost? You simply say: What you are using in your environment has to be paid for. And all of us together do exactly that.
Your party is in a difficult situation. Recently there has been much discussion here in Austria about what is the unique selling point of social democracy in the 21st century. What would you say?
Norbert Walter-Borjans: Social democratic values such as freedom, equality, solidarity, tolerance, a sense of responsibility for the community – people want these values. The problem is that people no longer assign these values to social democratic parties.
But how do you want to change that?
Norbert Walter-Borjans: You have to look where faith has been lost. What gave people certainty in the past, that their worries were in good hands with social democratic parties? We must draw a conclusion from this and make these values the benchmark again. We must get back to that! And we just can’t find it chic to surpass the conservatives in their policies.
