Economic Policies and GNP (Gross National Product) -

      Reporting on the economic health and politics of a country is a very large project- too
large to be done in a professional manner here. So I would like to limit this page to facts
which I believe stand out as exceptions to the economies of the surrounding EU countries
and in relation to the biggest economy- that of the US.

    A good starting point would perhaps be some information about the banking system.
Swiss banks now manage and invest private and institutional funds of some 2.5 trillion
dollars. That is trillion, not billion, or some 2,500 billion dollars. The reason the banking
system is such a success is not simply that they do a good job but also certainly due to
the banking secrecy laws. Tax evasion is not a crime here (only money hidden with real
criminal energy , ie. fraud) so foreign countries cannot expect that their requests for
information on "who has how much" will be granted. This is a very interesting topic and
I will expand on it soon. So if you have some extra pocket money rest assured that for
the foreseeable future if you can get it here you can keep it.
   And if you are really shy, you can place it in a numbered account complete with code-
words, which begin at about $100,000.

   Besides the well known banking secrecy laws which forbid the transfer of information to
the authorities (national and international), there is the little known proctice of granting preferential taxation to vey wealthy foreigners. It is possible to secure a residence permit
and escape the normal tax progression on your fortune.

   Originally, this was intended for very wealthy foreigners who wished to retire in Switzerland and who had no local business interests, ie. no direct income from Swiss sources. The possibility of negotiating a very favorable taxation is available in about half of the cantons.
   Recently, after the new treaties with the EU there has been an influx of young rich persons
from the surrounding countries which are also eligible for permanent residence under this
"playboy clause". These very large fortunes which often are in the $ billion range are taxed
not on the yearly income from foreign sources but on an estimation of the living expenses - usually five times the estimated living expenses. Recently, it has been disclosed that the average taxation of these some 3000 persons is on a living expense of only some $180,000.
   This has recently attracted the attention of the parliament and discussions have begun concerning the fiscal fairness of this practice and efforts have been started to eliminate it or extend it to Swiss citizens who meet the criteria.
   A recent example is the case of the racing driver Michael Schumacher who has moved to Switzerland. He has a fortune estimated as some $650 million and annual foreign income of
some $75 million. He has settled in the French canton of Vaud and the taxable income is
based, not on the $75 million, but on his household expenses which are in the usual
$200,000 range. Another example concerns a German business man who inquired which
canton would offer the best deal. He has a 185 million dollar fortune and an income of 11
million dollars. In Germany he has a total tax of 7.5 million but in Switzerland only $52,000.
A Swiss citizen in the same situation would pay a yearly tax of some six million dollars.
However, before you sell your furniture and pack your bags, be warned that the tax
discussions will begin at the $100 million level.

     In many  areas of finance and commerce there are differences or even complete
absence of laws corresponding to those in other countries which seem to have been
enacted with the motto - "that is not our problem, we don`t have any laws about such things".
This has had advantages over the years but pressure is now being applied by the EU and
US to close these loopholes. For example, until recently bribes in business dealings could
be deducted from the company taxes, and the practice itself is still not illegal - except for
civil service employees.
   The pressure to end the banking secrecy and supply the names of foreign account
holders has been answered somewhat in that Switzerland now  withholds automatically
35% of interest income on all accounts, ie. if you declare this and the account number on
your income tax it is refunded. Interestingly, there must be some people who have good
reasons to have secret accounts here . Recently, I read that each year some 3.75 billion
dollars remain unclaimed (is left to the government) from these accounts which do not file
tax return forms for some strange reason. I think you and I can both guess why.

   Speaking of fiscal matters, I just read that Switzerland has suffered a setback. The
latest Big Mac Index (2004) has determined that the Swiss Franc is now some 69% (!)
overvalued - compared to the dollar. It has regained the first place now for some 4 years
last year according to the Economist Magazine and has risen from 53% to 69% over this period. Suffice to say that the cost of living is approx. 30% higher than in the surrounding
EU countries and is increasingly cited as the main factor in the slow and slowing productivity
and growth rate of the Swiss industry.

   I have tons of material so will get busy expanding this interesting topic soon.
   In the meantime, take a look at the links on the Miscellaneous- page. Perhaps there is
something of interest there.