Economists and academics back the Tax Dodging Bill

TJN’s John Christensen joins up with almost 70 other economists and academics in the following letter backing the Tax Dodging Bill proposal published in The Times today:

Dear Sir,

It has become starkly clear that the global tax system enables multinational corporations to avoid huge sums in tax, both in developed countries like the United Kingdom and in developing countries.  All too often, as the recent scandals in Luxembourg have shown, tax avoidance is made possible by the collusion of governments.

The baleful result is a massive loss of public revenues which could be used to fight poverty in the developed and developing world, as well as a loss of public trust in large companies and governments, coupled with the growth of a corrosive short-termism in parts of the private sector which attempts to avoid as much tax as possible on corporate profits.

The biggest losers from the status quo are those countries least able to protect themselves. The International Monetary Fund has found that tax competition has harmful effects on the corporate tax bases of all countries, but these effects are more than twice as harmful for developing countries, which depend on corporate taxes to a greater extent than developed countries.[1]

So we believe that the United Kingdom, as an avowed supporter of sustainable development and as the home jurisdiction of many multinational companies, needs to take a strong approach to the problem which sets an example to other countries and catalyses firm international action.

This is why we are supporting the call by a coalition of non-governmental organisations, including Oxfam, Christian Aid, Tax Justice Network and ActionAid, for legislation to strengthen the United Kingdom’s rules against tax avoidance at home and abroad.

This legislation should reform any UK tax rules with harmful effects on developing countries and ensure that multinational companies publish detailed reports on their turnover, profits and tax payments in each country where they do business, so as to give the public a much clearer picture of these companies’ tax practices and deter the shifting of profits into tax havens.

Yours sincerely,

Academics Stand Against Poverty, Thomas Pogge

Global Financial Integrity, Raymond Baker

Tax Justice Network, John Christensen

(click here for list of signatories)

[1] IMF Policy Paper. Spillovers in International Corporate Taxation. 9^th May 2014. Page 20. “And what is notable is that the spillover impacts which emerge from this exercise are more than twice as large in non-OECD as in OECD countries. These losses are in many cases substantial: more than 50 percent of current [corporate income tax] revenue in several cases.”