When considering the lessons learnt and still to be learnt ten years after the Crash, it’s worth reminding ourselves of research conducted into public broadcaster the BBC’s famed impartiality through a major content analysis study conducted by academics at the Cardiff University School of Journalism, Media and Cultural Studies. Continue reading “#10yearsafter the Crash: looking back at BBC coverage”
We’ve blogged recently about the series of events marking the tenth anniversary of the financial crash which will focus on what we’ve learnt (and not learnt) and how we can reform our economies. We share below a press release from Promoting Economic Pluralism which is coordinating a programme of events in which the Tax Justice Network and Tax Justice UK are participating.
Continue reading “#10yearsafter the crash: anniversary today”
UPDATE (please see below for a UK graph)
If you ever believed that the inequality levels we’re seeing today in most so-called developed economies are inevitable, not so very remarkable, and not as extreme as some might have us believe, economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman have produced a graph that demonstrates the problem, well, rather graphically in the New York Times.
source: Gabriel Zucman
Continue reading “Inequality and the broken economy demonstrated in one graph”
For twelve years now whistleblower Rudolf Elmer has been fighting Swiss banking secrecy, with court case after court case. He’s been imprisoned, victimised, and his family has been harassed. His reputation has been systematically ripped apart in a way that we believe has been intended as a deterrent to other potential whistleblowers. We’ve regularly covered his battles against the Swiss “justice” system. For more background, he wrote a guest blog for us here on how Switzerland corrupted its courts to nail him.
The good news is that in the end the high court in Zurich turned down efforts by the prosecution to convict him of breaking Swiss banking secrecy laws in 2016. Now some may be sleeping less peacefully in their beds in India because he says if the Federal Supreme Court also rules in his favour in the current case going through the courts he’ll release the Julius Baer account data he still holds. He says this data contains the names of Indian politicians, film stars and sports personalities, among others.
Continue reading “Whistleblower Rudolf Elmer may soon release account data from Julius Baer bank”
Tax Justice Network is recruiting two Africa-based researchers for our Financial Secrecy and Tax Advocacy in Africa (FASTA) project, which the Norwegian Agency for Development Cooperation (NORAD) intends to support.
Continue reading “New Job Openings at TJN: Researcher (African Hub, franco- & anglophone)”
Back in January, the UK Chancellor of the Exchequer (the finance minister), Philip Hammond, used an interview with the German newspaper Welt am Sonntag to raise what has become known as the Brexit tax haven threat: if the EU doesn’t give the UK a good deal, the UK will lead a race to the bottom to undermine the EU on tax and financial regulatory standards.
Now, in an interview with Le Monde, the Chancellor has rowed back on that threat – giving the first open acknowledgement that the UK’s ‘recognisably European’ social, economic and cultural model depends on taxation. But even aside from the deep splits within the UK government, it remains unclear whether even Mr Hammond himself is clear on what he means:
In November 2008, the Queen apparently asked economists on a visit to the London School of Economics, ‘Why did no-one see it coming?’ Well, we’re approaching the ten year anniversary of the financial crash which wiped out Lehman Brothers, saw the first run on a UK bank (Northern Rock) in 150 years, and led to governments around the world bailing out global banking giants. The crash is still profoundly affecting our economies and our lives and we’re pleased to share with you an important series of events starting in September 2017 that will discuss and aim to address critical economic questions of our times ten years later – or to use the social media hashtag of the project – #10yearsafter. Among many questions they’ll be asking are what has changed, where we’re heading now, how we can make a fairer and more sustainable economic system, what lessons we should learn from the crash and what solutions we should be implementing.
Promoting Economic Pluralism advocates ‘economic pluralism in teaching, research and analysis to support better policies to tackle the major economic, social and environmental challenges we face.’ They’re working with the RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce) to bring together a wide variety of networks to participate in a range of events in September around the UK to reflect on the lessons ten years after the crash: Continue reading “10 Years after the Crash: building a reform agenda”
This week, TJN participated in a design sprint in London organised by Open Knowledge International. The purpose of the sprint was to bring together coders and tax justice advocates to start work on building a database for the new country by country reporting data that we hope will be released in the future, if public CbCR is implemented.
Below is a write up of the event written by Stephen Abbott Pugh and Serah Rono from OKI.
Continue reading “Open data for tax justice – designing a new CbCR database”
We’re pleased to share an article from Argentinian Economist Jorge Gaggero which was recently published by Opinion Sur which we’ve adapted in places from the original version. It’s time, he says, for countries in the Global South to act together to address capital flight and the slowness of the world’s biggest economies to reform it. Read on here:
The offshore world and the enablers of capital flight
Jorge Gaggero 17 July, 2017
As main protagonists of the offshore world, global banks, multinational corporations, fiscal havens, large global tax and auditing consulting firms and specialised law firms are the enablers of the capital flight from multinational corporations and the “global rich.”
Among Southern countries, Argentina is showing signs of early development of the capital flight phenomenon. After four decades of a persistent outflow of resources, the most recent calculations of the stock of offshore wealth of Argentinian-origin in relation to the magnitude of Argentina’s GDP (the gross domestic product representing the annual value of wealth created in the country), show a record high among Latin American countries—shared only with Venezuela. Estimations place Argentina within the top places of the global ranking, the equivalent of almost one GDP accumulated in the offshore world. Around 400-500 billion dollars lie outside the economic system (more than 90% of which is in illegal ways). The annual flight flow represents almost 5 points of GDP, a quarter of the total investment made every year in the country. Continue reading “The offshore world and the enablers of capital flight”
An important new study on Offshore Financial Centres (OFCs) from the University of Amsterdam has made some fascinating discoveries, challenging, as the Financial Secrecy Index has, the popular misconception that tax havens are only palm fringed little islands and exposing that in fact major economies play a key role in global tax avoidance. Specifically they’ve mined data that highlights the central role of ‘conduit’ and ‘sink’ havens. Enter stage right the United Kingdom and the Netherlands…
In ‘Uncovering Offshore Financial Centers: Conduits and Sinks in the Global Corporate Ownership Network’ economists and computer scientists in the CORPNET research group have used:
“a data-driven method based on network analysis to identify OFCs. Our data covers over 77 million ownership relations, which together form a large network in which value flows from subsidiaries to shareholders. From it we extract millions of global corporate ownership chains (see Figure 2). The resulting fine-grained insight allows us to not only see where value originates and ends up, but also exactly where it originated. This allows us to identify two types of OFCs:
- Sink-OFC: a jurisdiction in which a disproportional amount of value disappears from the economic system.
- Conduit-OFC: a jurisdiction through which a disproportional amount of value moves toward sink-OFCs.”
Continue reading “New research on key role major economies play in global tax avoidance”
In this month’s July 2017 Taxcast: we explore Land Value Tax and the billions in revenue we’re missing out on. Plus:
Continue reading “We explore Land Value Tax in the Tax Justice Network July 2017 podcast”
Today is the launch of #AltAusterity, a new, international research collaboration of which Tax Justice Network is a partner. The project aims to stimulate public debate on the subject of austerity though high quality research. It is a response to the lack of evidence which has underpinned the current policy agenda on austerity.
The project comes together following a December, 2016 workshop which brought together national findings on the damage being done under the rubric of austerity – not least, the UK’s persistence with dramatic corporate tax cuts, despite the clear and unrefuted evidence of the lack of benefits the policy brings. (See our Alex Cobham’s presentation slides.)
Over the coming years we will explore austerity in terms of cuts to spending (‘fiscal consolidation’) and revenue (e.g. tax cuts), but also public sector restructuring and labour market reforms. Although there is substantial evidence that austerity harms rather than aids economic growth and that it disproportionately hurts the most vulnerable of society, it remains salient and prominent in everyday political and policy conversations in many countries. Despite the growing public dissatisfaction with the policy, as expressed through the ballot box and protests.
Continue reading “Launch of international research collaboration, #AltAusterity”
Oxfam has today released a report on tax dodging by RB, the company formerly known as Reckitt Benckiser and the maker of thousands of well known household products.
The report looks at the 2012 restructuring of the company which saw it set up ‘hubs’ in the Netherlands, Dubai and Singapore, all well known corporate tax havens, and demonstrates the continuing power of the corporate expose as a mechanism for encouraging companies to change their ways. As a result of Oxfam’s work, RB itself is now calling on governments around the world to legislate to compel all multinationals to be transparent about the tax they pay though country by country reporting of key financial data.
UPDATE BELOW, 24/07/2017
If you ever wondered what kind of response to a financial transparency law might indicate a corrupted financial secrecy industry, look no further. We reported recently on what’s been happening to trusts in New Zealand in our Offshore Wrapper (our weekly take on tax justice news – for which you can sign up here, don’t miss out). First, here’s what our very own George Turner reported on about a month ago, followed by interesting updates: Continue reading “Post-Panama Papers sunlight on New Zealand Trusts”
There was news this week that Mauritius has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). This is an initiative from the OECD to allow countries to take measures designed to stop tax avoidance by multinational companies and put them into their existing network of tax treaties without renegotiating those treaties.
This is a particularly important measure for a countries like Mauritius. Mauritius has a wide network of tax treaties with African and South Asian countries allowing it to act as a conduit for capital to slip tax freely between the West and the developing world. This is commonly called treaty shopping.
So, the signing of the MLI by Mauritius should be seen as good news. Well, not quite. The MLI does not change the relationship between the signatory and all other countries that have a tax treaty with the signatory. Jurisdictions which are not part of the MLI are not included, and even within the MLI jurisdictions can chose not to modify tax treaties with others in the system. This happens through the publication of each country’s ‘preferences’.
A closer look at Mauritius’s ‘preferences’ shows that a number of vitally important treaty relationships are not covered by the jurisdiction joining the MLI, leaving a number of developing countries vulnerable to companies using Mauritius to shift profits in an attempt to avoid tax.
We have been through the list of Mauritius’s ‘preferences’ in the MLI and Mauritius’s existing treaty network. The jurisdictions which currently have a treaty relationship with Mauritius but are not covered by the MLI are as follows:
| Australia | Botswana | Egypt |
| India | Malaysia | Mozambique |
| Namibia | Nepal | Pakistan |
| Bangladesh | China | Rwanda |
| Senegal | Singapore | Sri Lanka |
| Thailand | Tunisia | Uganda |
| Zambia | Zimbabwe |
Countries which are not covered by the MLI or do not match in terms of these preferences have to renegotiate their treaties on a bilateral basis to include clauses which prevent the tax abuse. Here things can get complicated too, as there are a range of anti-avoidance measures available to countries, some better than others. In one key area – the anti-treaty abuse rule – an effective option is to apply a “principle purpose test”. (PPT) This test denies the benefits of a tax treaty if one of the principle purposes of a transaction was to gain that treaty benefit. Mauritius has accepted this test as an interim measure in the countries it will implement the MLI with.
However, in bi-lateral negotiations it has said it prefers the limitation of benefit rule, which applies a large number of more technical criteria to the parties completing a transaction and denies treaty benefits to parties which do not meet those tests. Those tests can be a local ownership requirement, for example.
A limitation of benefits rule is much more complicated to administer than than a PPT test, which causes difficulties for developing countries.
Finally, through the MLI system a country does not need to implement all of the anti-avoidance provisions which form part of the MLI. As well as choosing which countries the MLI applies to, a contracting party can also express reservations on specific policy areas which it does not want to implement. Mauritius has a great deal of reservations about MLI provisions, including on measures such as strengthening capital gains tax from the sale of participations in domestic companies (article 9), the transfer of dividends (article 8), and provisions to prevent tax abuse of income from permanent establishments in third countries (article 10), and the artificial avoidance of permanent establishment status (articles 12 and 13).
So whilst Mauritius (and others) may celebrate the signing of the MLI as a great work of spin for this tax haven island, the weakness of the system still allows this jurisdiction to create significant problems for its neighbours in Africa and South Asia.
Welcome to this month’s latest podcast and radio programme in Spanish with Marcelo Justo and Marta Nuñez, downloaded and broadcast on radio networks across Latin America and Spain. ¡Bienvenidos y bienvenidas a nuestro podcast y programa radiofónica! (abajo en castellano).
In the July 2017 programme:
Guests:
Whilst the eyes of the world focused on the isolation of the US from the ‘G19’ position on climate change, something remarkable played out elsewhere in the process. Following closely the common EU position that we highlighted a few days ago, the G20 communique devotes important space to tax justice.
It’s so good we quote it in full below. But the key point is in our added italics: the EU (and presumably others) have managed to get the US to sign up to the new international standard for automatic, multilateral exchange of tax information, the Common Reporting Standard (CRS).
The US is currently the only financial centre of any size not to sign up to the CRS.
Further on in the text the communiqué threatens sanctions against countries which do not meet the agreed international standards on tax transparency which include adoption of the CRS. So has the US given up on the opaque road marked ‘Tax Haven USA’?
The logic of the communiqué is clear. If the OECD is serious about enforcing international standards of tax transparency, it must blacklist the US if it fails to adopt the CRS before 2018. This will pave the way for other countries to put in place sanctions against US banks, forcing compliance. Whether the OECD will have the political space, or the guts to do that to its biggest member, is another question altogether. But it’s now clear that the EU is promoting the CRS as the standard it expects the US to reach. The EU blacklisting process will also be watched with interest.
International Tax Cooperation and Financial Transparency: We will continue our work for a globally fair and modern international tax system and welcome international cooperation on pro-growth tax policies. We remain committed to the implementation of the Base Erosion and Profit Shifting (BEPS) package and encourage all relevant jurisdictions to join the Inclusive Framework. We look forward to the first automatic exchange of financial account information under the Common Reporting Standard (CRS) in September 2017. We call on all relevant jurisdictions to begin exchanges by September 2018 at the latest. We commend the recent progress made by jurisdictions to meet a satisfactory level of implementation of the agreed international standards on tax transparency and look forward to an updated list by the OECD by our next Summit reflecting further progress made towards implementation. Defensive measures will be considered against listed jurisdictions. We continue to support assistance to developing countries in building their tax capacity. We are also working on enhancing tax certainty and with the OECD on the tax challenges raised by digitalisation of the economy. As an important tool in our fight against corruption, tax evasion, terrorist financing and money laundering, we will advance the effective implementation of the international standards on transparency and beneficial ownership of legal persons and legal arrangements, including the availability of information in the domestic and crossborder context.
The Juncker/Tusk letter of 4 July setting out common positions for the EU at the G20 throws down a direct challenge to the Trump administration, on Tax Justice Network priorities in particular – dealing with tax avoidance, tax evasion and anonymous ownership of companies, trusts and foundations.
An interesting event has come to our attention that we’d like to share, taking place at Chatham House in London. Full event details here.
Recovering Africa’s Stolen Assets: Lessons from the Windward Trading Case
A report by the World Bank’s Stolen Asset Recovery programme found that, while nearly $1.4 billion in suspected corrupt assets were frozen in OECD countries between 2010 and 2012, less than $150 million was returned. Recovering stolen assets is of particular importance for sub-Saharan African countries, given the extent of the looting of public funds carried out by corrupt leaders and officials.
Prosecuting international corruption and recovering stolen assets has proved difficult and time-consuming. Both states from which assets have been stolen, and those where these assets are laundered or stored, have struggled to produce results. Continue reading “Recovering Africa’s Stolen Assets: from Jersey to Kenya”
Ahead of the G20 Summit in Hamburg this week our own George Turner has published this op-ed in the German newspaper Die Tageszeitung today. The article discusses why, despite sustained political engagement from world leaders, we are still some way from solving the problem of tax avoidance and tax evasion. Here’s an English translation of the article:
Continue reading “Will the G20 ever end the global problem of tax avoidance and tax evasion?”
We’re delighted to bring you a guest blog by Lukas Hakelberg, a researcher from the University of Bamberg – one of our partners in the EC-funded COFFERS project. The blog outlines the motivation and key findings of a study by Lukas and a colleague, Max Schaub.
We’ve been raising the alarm about the global impact of ‘Tax Haven USA’ as the world’s biggest financial centre, increasingly an outlier, resisting broader trends towards tax transparency. The study by Hakelberg and Schaub uses the Tax Justice Network’s Financial Secrecy Index in addressing the question of whether this behaviour has effectively redistributed financial activity in favour of the US, and at the expense of other secrecy jurisdictions.
Continue reading “Redistributive hypocrisy: The growing dominance of tax haven USA”
#tjn17
GLOBAL TAX JUSTICE AT A CROSSROADS
SOUTHERN LEADERSHIP AND THE
CHALLENGES OF TRUMP AND BREXIT
City, University of London, 5-6 July 2017
The Association for Accountancy & Business Affairs (AABA), City, University of London (CityPERC), and the Tax Justice Network (TJN), are delighted to confirm the programme for next week’s annual conference – the latest in an annual event series dating back to 2003. The events bring together researchers, academics, journalists, policy staff of civil society organisations, consultants and professionals, elected politicians and their researchers, government and international organisation officials. The purpose is to facilitate research, open-minded debate and discussion, and to generate ideas and proposals to inform and shape political initiatives and mobilisation.
There is a small charge for attendance and refreshments during the two days. For more information contact: [email protected] Continue reading “Tax Justice Annual Conference 2017, 5-6 July: Final Programme”
