When you next visit your bank, spot the American flag. If the Stars and Stripes is not displayed proudly in the lobby, call for the manager. Ask if he is an agent of the US Government, a “Qualified Intermediary”, with a duty to report on the financial activities of customers with American connections, to monitor the payment of US dividends, interest and other income, to withhold taxes and make appropriate payments to the US tax authorities.

Frighten him further, if you dare: tell him that British banks that are not “qualified” according to the US Internal Revenue Service (IRS) will soon suffer discrimination from US paying agents. If he fails to qualify, his American customers will be deemed to be tax evaders — criminals — unless they prove otherwise. It’s a fair bet that your bank will soon be flying Old Glory and, for good measure, a framed picture of President Obama will hang behind every branch manager’s desk from Morecambe to Mumbai.

The American tax authorities are on a roll. Propelled by panic about the deficit and fuelled by political opportunism, the long arm of the IRS is to be extended — everywhere. Most of the world’s big financial institutions already take part in the QI programme, a regime set up in 2001 to ensure that the correct tax is withheld by financial institutions on US-sourced dividend income from stocks and bonds. But Mr Obama wants to take another big step.

It’s a giant leap, not for mankind, but for the power of the State. If the President gets his way in Congress, every bank in the world, or at least every bank that matters, will be forced to become an American bank. It’s a Martini clause for global financial services. Any time, any place, anywhere that banks do business with American content — a US taxpayer, a US security or payment — the US taxman will be informed and, where appropriate, a sum withheld.

Every bank will be an agent collecting and reporting for the IRS and any bank that demurs could pay a price. There will be a rebuttable presumption that a US taxpayer who deals with a non-QI institution is seeking to evade tax. We can assume that such non-compliant institutions will come under intense scrutiny.

“So what?” you might think. I care not a jot if the great Republic pursues its meek and compliant subjects to the ends of the earth. I should care, however, when Congress presumes that its writ extends into the administration of every bank on the planet. President Obama wants banks everywhere to behave as if they were on Main Street, Ohio. Worse than his imperial ambition is the belief that such an administrative burden can be imposed on foreign soil at congressional whim. This paper chase will cost a pretty penny. Our banks, bludgeoned and battered, offer lousy rates to savers and charge crippling interest to borrowers; why should we pay more to ensure that dues are delivered to Uncle Sam?

Faced with such an enormous claim of extraterritorial jurisdiction, Europe is curiously silent. The British Bankers’ Association (BBA) and its European and Canadian partners are making frantic efforts to lobby Congress in an attempt to water down the Bill. According to the BBA, some British institutions are considering whether to opt out of QI altogether, so onerous is the proposed new regime. The reporting requirements will concern foreign as well as US income and each and every unit of a bank worldwide must be compliant. Banks will be expected to provide not only titular names but also the beneficial owners behind trusts, companies and nominees.

The intention is clear - to ensure that Americans who are reluctant to pay all their taxes have nowhere to go. “The IRS would like the entire global financial system to work for them,” quips Stephen Land, a tax partner at Linklaters in New York. The question is why this ambition is greeted with a wall of silence by governments normally quick to challenge excessive American zeal. The answer is obvious - within Westminster, Paris, Berlin, Brussels everywhere, there is excitement over the notion of turning the world’s financial system into a global tax collection net. The complexity of such a task would be self-defeating, but near-bankrupt governments are prone to fantasy. It’s a good time to crack the whip, they think, and everybody hates the banks.

We hate them but we need them and we allow banks to be suborned further by the will of the State at our peril. It’s a matter of indifference to Britons whether Americans pay their dues and it should remain that way. If British, German or French banks are to be information collectors for the US Government, where will it end? Are we also happy if our banks provide such information to other tax authorities? What about Russia or China? Surely, such arrangements ought to be reciprocal.

Banks are foolish, they lose our money, but they are seldom sinister. Banks don’t start wars, kidnap or murder innocent people. It is governments that do those things. It is time to resist the ambition of these governing people.

carl.mortished@thetimes.co.uk

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