Switzerland's justice minister is sympathetic to calls for a tax on bonuses that may end a parliamentary deadlock over a tax deal crucial to the future of banking giant UBS, a Swiss paper reported today.
Switzerland's Social Democratic Party is ready to drop objections to a deal ending a bitter US tax dispute against UBS, the world's second-largest asset manager, if Berne introduces a tax on bankers' bonuses.
"There needs to be a tax on bonuses," justice minister Eveline Widmer-Schlumpf said about the Social Democrats' demands in an interview in today's Tages-Anzeiger. "In principle I support the Social Democrats' requests," she said.
But she added there may not be enough time to formally introduce new legislation on variable compensation before Parliament votes on the UBS deal.
The votes of the Social Democrats, the Alpine nation's second-biggest party, could make or break the deal, struck last August, to hand over data on 4,450 clients of UBS suspected of hiding money from the US tax authorities. The bigger, right-wing SVP has said it would vote against the deal.
If parliamentarians reject the US tax deal, preventing Switzerland from handing over the client data within a year as agreed, US authorities could reopen damaging legal proceedings against the bank, Ms Widmer-Schlumpf warned.
"The United States would use every level of escalation available to it under the terms of the treaty," the minister said, adding this would force UBS to hand over client data to U.S. authorities directly, breaking Swiss bank secrecy laws.
Large bonus packages have angered many Swiss voters and investors after UBS booked the biggest annual loss in Swiss corporate history and needed taxpayers to dig deep into their pockets to help it in 2008.
UBS and Credit Suisse stoked these heated tempers further last month by awarding top bankers multi-million dollar bonuses.
A source close to the finance ministry told Reuters earlier this month that the ministry would consider putting a ceiling on how much bankers' pay can be charged as a cost before corporate income tax.