French budget minister warns tax evaders to confess now

PARIS, May 26 (Reuters) - Budget Minister Bernard Cazeneuvesaid French taxpayers holding bank accounts abroad must makethem known to authorities now or face much tougher penalties fortax evasion, as France seeks to end years of lax oversight.

The Socialist government, in line with European partners, isleading a crackdown on tax avoidance that deprives the state ofup to 50 billion euros ($64.6 billion) in revenue annually,according to a Senate commission report published last year.

Parliament will start in June to debate a draft lawreinforcing tax oversight that foresees tougher penalties forevaders including stiffer prison sentences, which can last up toseven years for the worst offenders.

"I call on all those who have bank accounts abroad to abideby the law now by getting in touch with tax authorities,"Cazeneuve told Europe 1 radio on Sunday. "If they refuse torespect the law, they will face much harsher penalties."

President Francois Hollande has hardened his approach to taxevasion after former budget minister Jerome Cahuzac admitted inMarch to holding a Swiss bank account, despite repeated publicdenials he was avoiding taxes. Cazeneuve is his successor.

The episode rattled a Socialist government that vowed to"restore fiscal justice" in France by imposing a 75-percent taxon revenues exceeding 1 million euros per year - a plansignificantly watered after censure by a Constitutional Court.

France, where citizens pay their own income tax at the endof the fiscal cycle, rather than having it taken out of theirsalary, struggles with evasion due to its high levies and theease of placing money in nearby tax havens.

The French unit of Swiss bank UBS could be placedunder formal investigation in the coming days as part of a probeinto whether it offered potential clients products designed tocheat the taxman, a source told Reuters on Friday.

Three UBS France executives have been under investigation inrelation to that probe, a judicial source told Reuters in April.

Meanwhile France has contacted Swiss authorities for help indetermining whether 353 prospective UBS clients had undeclaredassets in Switzerland.

Separately, France has opened a probe into whether Britishbank HSBC offered illicit products to help Frenchclients avoid tax in Switzerland, the Paris prosecutors' officesaid last month.