21 st march 2012, european economic and social committee tax and financial havens: a threat to the...
TRANSCRIPT
21st March 2012, European Economic and Social Committee
TAX AND FINANCIAL HAVENS:A THREAT TO THE EU’S INTERNAL MARKET
John ChristensenDirector, International Secretariat
Mission Statement
In an era of globalisation, the
Tax Justice Network is
committed to a socially just,
democratic and progressive
system of taxation. TJN
campaigns from an
internationalist perspective
for a tax system which is
favourable for poor people in
developing and developed
countries, and finances public
goods and taxes harmful
activities which pollute and
cause unacceptable
inequality.
GLOBALISATION’S FAULTLINESTax havens are a fully networked and global
parallel financial economy: they are a core
feature of contemporary capitalism
Tax havens shape trade and investment patterns
as banks and major companies avoid
regulation and minimise tax.
Tax havens played a major role in shaping the
2007/08 financial crisis and in creating a
criminogenic economic environment
The big players in this parallel economy are
not tiny islands or obscure alpine
principalities: they include major and
influential countries like Switzerland, United
Kingdom and United States
The damage done: Microeconomic distortions harm market
competition
At the macro level, tax competition
shifts the relative costs of labour and
capital
Lack of transparency raises risk
premiums
Aggressive avoidance harms tax
systems and public finance, and
encourages economic free-riding
Secrecy increases the profitability of
economic crime
Encourages rent-seeking activities
Damages trust and institutional quality
For our purposes ‘secrecy’ describes a situation in which relevant information is not readily available on public record, where public record means a register that can be accessed free of charge or at low cost via the internet from anywhere in the world.
What do we mean by secrecy?
Knowledge of beneficial ownership
Key aspects of corporate transparency regulation
Efficiency of tax and financial regulation
International standards and cooperation
1 Banking secrecy
4 Public company ownership
7 Fit for information exchange
11 Anti-money laundering
2 Trust and foundation register
5 Public company accounts
8 Efficiency of tax administration
12 Automatic information exchange
3 Recorded company ownership
6 Country-by-country reporting
9 Avoids promoting tax evasion
13 Bilateral treaties
10 Harmful legal vehicles
14 International transparency commitments
15 International judicial cooperation
15 financial secrecy indicators
8
91-100
81-90
71-80
61-70
51-60
41-50
31-40
European countries including overseas dependencies by secrecy score – source: 2011 Financial Secrecy Index
AN, BM, LI, MS, TC
AD, AI, CH, GG, GH, GI, JE, KY, MC, SM, VG
BE, CY, DE, FR, PT
GB, HU, IE, IT, LV, MT, NL
DK, ES
AT, IM, LU
Exceptionally secretive
Moderately secretive
Proceed with reforms to strengthen the Savings Tax Directive, and promote automatic information exchange as the effective international standard; sanction non-cooperative jurisdictions
Adopt a Financial Reporting Standard on country-by-country reporting
Require full public disclosure of beneficial ownership of trusts, companies, foundations and similar legal entities
Adopt a Common Consolidated Corporate Tax Base and tax MNCs on a unitary basis
Strengthening the transparency and
governance of the EU’s internal markets “They serve no socially useful function. They exist only to circumvent norms. They undermine good governance.”
Joseph Stiglitz
Strengthen international cooperation with a primary objective of ensuring that national tax systems do not have negative external impacts on tax sovereignty elsewhere (UN Tax Committee proposals under Monterrey Consensus)
Define tax evasion as a corrupt activity within the scope of the UN Convention Against Corruption, and treat as a predicate crime under AML regimes (Financial Action Task Force)
Adopt an EU General Anti-Avoidance Principle and require professional associations (e.g. bankers, lawyers, accountants, trust administrators) to issue guidelines to their members on the use of secrecy jurisdictions
Enhanced cooperation'By eroding the revenue base, tax competition can become too much of a good thing… Bidding wars between countries can undermine the collective revenue base. This increases the tax burden on the less mobile industries and on labour, relative to capital.'
Financial Times
“Shaxson comes as close to anyone ever has in getting to the crux of the tax haven conundrum, which is to attempt to answer the question: why are they tolerated?”Evening Standard
“Combines meticulous research with amusing anecdotes, resulting in a very readable account of the murky world of offshore and a strong moral message that the system needs to be changed.”Financial Times
“A blistering account of the role that tax havens play in international finance. Brilliant.”London Review of Books
“..the most important book…since the Spirit Level.”OpenDemocracy
“Shaxson is an imbecile…”Tony Travers Cayman Islands Financial Services Authority