New U.S. report: Offshore Tax Havens Cost Small Businesses $3,244 a Year

From the U.S. Public Interests Research Group (PIRG):

As tax day approaches, it’s important to remember that small businesses end up picking up the tab for offshore tax loopholes used by many large multinational corporations. U.S. PIRG joined Senator Bernie Sanders, Bryan McGannon of the American Sustainable Business Council, and Bob McIntyre of Citizens for Tax Justice today to release a new study by the U.S. PIRG Education Fund revealing that the average small business owner in 2014 would have to pay an extra $3,244 in taxes to make up for the money lost in 2014 due to offshore tax haven abuse by large multinational corporations. Continue reading “New U.S. report: Offshore Tax Havens Cost Small Businesses $3,244 a Year” →

Quote of the day – tax avoidance as red flag for investors

Tax avoidance as refined sugar: a short-term hit, with long term damage

From the Financial Times, our quote of the day:

“investors were viewing the aggressiveness of a company’s tax planning as a proxy for accounting risks and the company’s broader management style.”

Which is just as we have always said. Tax avoidance is shortcut behaviour: the opposite of building genuine long-term productive business. Or, as UK barrister David Quentin noted not so long ago:

“Tax avoidance in companies is like refined sugar in the human body – empty financial calories with adverse long-term health effects.”

Continue reading “Quote of the day – tax avoidance as red flag for investors” →

Register here for TJN’s annual discussion workshop at City University, London, 25th-26th June 2015

You can register here to attend TJN’s annual discussion workshop, held in association with the Association for Accountancy & Business Affairs and City University, London, which will be held on 25th-26th June 2015.

The workshop theme is Should Nation States Compete? The outline programme is published below (it may be subject to alteration). A fuller programme including paper abstracts is available here.

PROGRAMME

DAY ONE – 25th June 2015

10h00 – 10h30 Registration and coffee

10h30 – 11h00 Welcome and introductions

11h00 – 12h30 Session One
Facilitator – David Quentin
Discussant – Anastasia Nesvetailova

Matthew Watson – Ricardian Myth-Making: Comparative Advantage Theory as Ideologically Selective Historical Reconstruction

Atul Shah – Systemic Regulatory Arbitrage: the Role of KPMG

Isabel Estevez – A Minimum Cooperation Consensus for a South American Fordian Pact

12h30 – 13h30 Lunch

13h30 – 15h00 Session Two

Facilitator – Naomi Fowler
Discussant – Duncan Wigan

Filomeno III Sta Ana – Questioning Fiscal Incentives as a Policy Instrument for Competitiveness: The Case of Southeast Asia

Darian Heim – Justice, Migration, and the Competition for Talent

Ali Saqer – International Competitiveness and Economic Resilience: from Social Welfare to Corporate Welfare

15h00 – 15h30 Tea break

15h30 – 17h00 Session Three

Facilitator – Krishen Mehta
Discussant – Jim Henry

Juliette Schwak – South Korean Nation Branding and the Building of a Competitiveness Society

Jakob Engel – Regulating the Commodity Trading Industry: Comparing firm strategies to evade stricter regulation at three levels of governance

Linda Arch – Competition amongst the London Clearing Banks, 1946 to 1979

17h30 – 20h00 Film Screening

Screening of Harold Crook’s award-winning film documentary The Price We Pay, followed by panel discussion with Nick Shaxson, Jim Henry, moderated by Ronen Palan

20h00 Dinner at BananaTree

DAY TWO – 26th June 2015

09h30 – 11h00 Session Four

Facilitator – Liz Nelson
Discussant – Prem Sikka

Michael Tyrala – The Changing Role of the USA in the Regulation of the Offshore Economy

Duncan Wigan – The Finance Curse and Competition through Finance

Anastasia Nesvetailova – The Offshore Nexus, Sanctions Busting and the Russian Crisis

11h00 – 11h30 Coffee / tea break

11h30 – 13h00 Session Five

Facilitator – Alex Cobham
Discussant – Richard Murphy

Hagai Kalai– Back to Source: From international corporate tax neutrality to efficient investment policy and its implication for a desirable international tax policy

Matti Ylönen – Politics of Intra-Firm Trade: Corporate Price Planning and the Double Role of the Arm’s Length Principle

Diarmid O’Sullivan – Curbing tax competition: how can we get to a global consensus?

13h00 – 14h00 Lunch

14h00 – 15h30 Panel Discussion – The ‘Competitiveness’ Conundrum

Moderator – Naomi Fowler
Discussants – Will Davies, Ronen Palan, Matthew Watson

15h30 Workshop ends

World Premiere of The Emperor’s New Clothes – 21st April 2015

Michael Winterbottom’s latest film The Emperor’s New Clothes, starring comedian Russell Brand, and featuring a range of people familiar to the tax justice community, including TJN’s director John Christensen, gets it’s world premiere in British cinemas on 21st April.

This blogger has already watched an early cut of the film and can vouch that this is a full throttle investigation into the the injustices that arise when politicians punish poor and vulnerable people by withdrawing benefits while allowing banksters and tax cheats to go scot free.

Book here to watch the special screening of The Emperor’s New Clothes with a live interview with Russell Brand.

Quote of the day – on attitudes to corporate responsibility

Jolyon Maugham

Our quote of the day comes from Jolyon Maugham, a UK tax barrister. Our quote of the day is the bit in bold, which is a sign of how much success we and our allies have had in changing the debates:

“Survey after survey places tax first amongst CSR concerns. Tax structured transactions are in near mortal decline. And litigating even vanilla transactions is perceived to carry prohibitive reputational risks. Yet a route to take matters forward remains elusive.
But here’s a prescription. Business needs to take the initiative. The defensive formulation – “we comply with all relevant tax laws” – will no longer do for a public inflamed on a diet of double Irish and Dutch sandwiches.
Boards need to take ownership of the tax issue. They should publish, with their annual reports, statements of tax policy. What strategy should the tax department pursue? What is the target rate of tax on corporate gains? Will the Group transact purely for tax advantages?”

Some good ideas in this last paragraph.

And now, a quote from our own director John Christensen, to illustrate just how far the thinking has moved, at least in Britain. It concerns a time when he stood up in a meeting about corporate responsibility at Chatham House in London in 2004, urged people to consider that large corporations should consider that paying tax was central to their claims of social responsibility.

“They looked me as if I’d left a dog turd in the middle of the table. When I sat down it felt like there was a 30 second silence, accompanied by looks of utter hostility from all around me. Oh boy. My knees were trembling, my blood was pounding.”

So there’s been some progress. There is plenty of grounds for continued skepticism, for sure, but progress it is.

More thinking on tax and corporate responsibility from David Quentin, here.

‘National Competitiveness’: a crowbar for corporate and financial interests

Will Davies, Co-Director of the Political Economy Research Centre (PERC), Goldsmiths, University of London

This was originally posted yesterday at the new Fools’ Gold site, which is dedicated to understanding how nations do or don’t ‘compete’.

The term “UK PLC” — the ‘PLC’ bit standing for Public Limited Company — evokes notions that whole countries behave like corporations. It is routinely trotted out by politicians in the United Kingdom: why, this FG editor even heard (and gnashed teeth at) this very term on the BBC’s Today Programme this morning, on a day when 100 UK business leaders signed an open letter suggesting that the UK must display that it is “open for business” by supplying further tax cuts and other goodies to large corporations.

Versions of these kinds of slogans, implicitly equating the interests of large corporate players with the wider national interest, can be found in most countries.

In our latest article, Will Davies asks how slogans such as these – which are intimately intertwined with notions of ‘national competitiveness’ – have managed to achieve such sway over policy-making, around the world.

Continue reading “‘National Competitiveness’: a crowbar for corporate and financial interests” →

Tax Justice Research Bulletin 1(3)

By Alex Cobham, TJN’s Director of Research

March 2015. Welcome to the third Tax Justice Research Bulletin, a monthly series dedicated to tracking the latest developments in policy-relevant research on national and international tax.

This issue looks at new papers on the responsibilities of tax professionals in respect of abusive tax behaviour and corruption; and on the parallels between the 2008 financial crisis and that of 1974. The Spotlight section considers contrasting views on tax and freedom. Continue reading “Tax Justice Research Bulletin 1(3)” →

Tax Justice Network – Changing the World

We have just put together a promotional video for TJN, to help explain our role in the fast-growing tax justice debates. We’ll place this video permanently on our home page, below the blogs, and on our Tax Justice TV page.

We have also just started soliciting testimonials from various people about TJN’s role, and this morning we received this one, via e-mail.

“TJN has done more than any other organization to put fiscal justice at the center of the policy agenda. Tax issues should not be left to those who want to escape taxes! Changes will come when more and more citizens of the world take ownership of these matters. TJN is a powerful force acting in this direction.”
– Thomas Piketty

New report on abusive tax arrangements hurting Greece

From SOMO in the Netherlands:

How Canadian mining company Eldorado Gold destroys the Greek environment and dodges tax through Dutch mailbox companies

A new SOMO report reveals that Greece’s economic recovery is being undermined by large-scale tax avoidance – enabled by the Netherlands. At the same time, Greece endures harsh austerity measures imposed by the European Commission, European Central Bank and IMF which are supported by the Netherlands. Continue reading “New report on abusive tax arrangements hurting Greece” →

Do lower tax rates curb tax cheating? Really?

Median statutory corporate tax rates, by country income group, 1980-2010. (Source: IMF.)

It’s a good question. Now, an Australian story, via The Guardian:

“Treasurer Joe Hockey has said Australia is “losing control of our destiny from a taxation perspective” because of “holes” in the tax treatment of multinational corporations, as a parliamentary committee prepares to grill global companies about the tax they pay and former tax officials warn that the tax office has lost the expertise to tackle the problem.”

Continue reading “Do lower tax rates curb tax cheating? Really?” →

The Price We Pay – interview with director Harold Crooks

Watch the Canadian Brodcasting Company interview with film director Harold Crooks discussing his film The Price We Pay.

UNCTAD: multinational tax avoidance costs developing countries $100 billion+

Exposure to offshore hubs. Click to enlarge.

The UN Conference on Trade and Development (UNCTAD) has just published a major new study on corporate tax in developing countries, which contains a wealth of new information analysis as well as some important headline numbers: notably that developing countries lost around $100 billion per year in revenues due to tax avoidance by multinational enterprises (MNEs), and as much as $300 billion in total lost development finance. Continue reading “UNCTAD: multinational tax avoidance costs developing countries $100 billion+” →

An African civil society perspective on Financing for Development

From the Uncounted blog, run by TJN’s Director of Research, Alex Cobham

The African regional consultation on Financing for Development (FfD) took place at the start of the week (like the European one). The submission from TJN-Africa puts particular emphasis on inequality, including women’s rights, and on global data issues. Continue reading “An African civil society perspective on Financing for Development” →

Britain’s new company registry is a job half done

First, the good news: the UK government has committed to creating a central public register of company ownership following Parliament’s approval of this crucial measure to tackle crime and tax dodging. Continue reading “Britain’s new company registry is a job half done” →

Quote of the Day on Trickle-Down Economics

Trickle-down: the theory explained

Economist John Kenneth Galbraith described trickle-down theory as “the less than elegant metaphor that if one feeds the horse enough oats, some will pass through to the road for the sparrows.” Which pretty much summarises what has happened in practice over the past forty years as the theory has been rigorously applied by giving tax cuts to rich people and powerful corporations. Continue reading “Quote of the Day on Trickle-Down Economics” →

What is competitiveness? #1 – Robert Reich

From the Fools’ Gold blog, an article that speaks for itself

What is Competitiveness? #1 Robert Reich

This is the first in an ongoing series of articles we are planning, to explore what competitiveness is, from the perspective of particular public figures or intellectuals. For the first in this series we’ve chosen Robert Reich, a former U.S. Labor Secretary. He’s written an article in plain English that makes a number of clear and important points, which are still fully valid even though it was written in 2011.

It begins with an excellent summary:

“Whenever you hear a business executive or politician use the term “American competitiveness,” watch your wallet. Few terms in public discourse have gone so directly from obscurity to meaninglessness without any intervening period of coherence.”

Continue reading “What is competitiveness? #1 – Robert Reich” →

Meet TJN in Oxford to discuss the fallacy of tax “competitiveness”

The Tax Justice Network Podcast, March 2015

The Tax Justice Network Podcast, March 2015

In the March 2015 Taxcast: Democracy for sale – how our politics rely heavily on tax haven-friendly donors. Also, we ask: why is HSBC shutting down offshore accounts in Jersey? Are we in the final few years of the corporate income tax? Is Australia’s exempting of big companies from new transparency rules a joke? Plus more scandal and analysis that you won’t find anywhere else. Continue reading “The Tax Justice Network Podcast, March 2015” →

Tax haven Gibraltar sues newspaper for calling it a tax haven

Gibraltar in deep waters?

Another story from TJN’s Department of You-Couldn’t-Make-This-Stuff-Up. News is coming out that the government of Gibraltar is planning to sue Spanish newspaper ABC for defamation. Apparently the Gibraltarians take exception to the British Overseas Territory being depicted as a tax haven.

Here is the beef:

“THE Gibraltar government is suing a Spanish daily national over a front page story which pictured the Rock as an iceberg of dirty money.
The article, which appeared in ABC newspaper, labelled Gibraltar a ‘tax haven’ and alleged it is home to ‘15 organised crime gangs’ connected to drug smuggling, money laundering and the Russian mafia.
A defamation claim has been launched by the government, who claim the allegations are ‘wholly inaccurate and damaging to the reputation and name of Gibraltar’.”

Can this be true? A couple of things surprise us about this story, beyond the fact that countries don’t sue newspapers (even if the reverse ain’t true).

First, according to TJN’s financial secrecy index, Gibraltar scored a wholly unpleasant 79 out of 100 in 2013, placing it among the most secretive and least cooperative jurisdictions on the planet. The government of Gibraltar has never disputed these findings, so its claim against ABC strikes us as being akin to the Pope suing a newspaper for describing him as a Catholic.

The charts below tell part of the story, but take a look at the fuller story here.

Second, its not clear, to us at least, how a government can sue a newspaper for defamation. This sounds like the usual tax haven blowing-off stuff that we hear all the time from these bully boys. Perhaps Gibraltar’s Head of State should be consulted before her government kicks the hornet’s nest and triggers yet another diplomatic row between Britain and Spain.

For the record, today’s blogger worked offshore in Jersey in the dim and distant. The instruction from senior partners in London was to direct the really, really dodgy business away from Jersey to, err, Gibraltar. For examples of some the types of dodgy business that’s been linked to Gib in the recent past look here, and here, and here, and here, and it goes on and on ad nauseam.

One of our only slightly tongue in cheek definitions of a tax haven, or secrecy jurisdiction, is that it denies being one. “We are not a tax haven. They all say that.” And while we’re on the subject of tax haven deniers, take a look at the comments here from Jersey’s Geoff Cook, now Chief Exec of Jersey Finance, formerly responsible for wealth management at, whoops, HSBC. Some people have no shame.

People’s Parliament to discuss How Corrupt is Britain?

On Thursday 26th March 2015, the People’s Parliament will meet at Westminster in London to discuss a complex question, How Corrupt is Britain?

British people have long prided themselves on having a relatively corruption-free liberal democracy. Corruption, as the old saying goes, is something that happens in another country. Continue reading “People’s Parliament to discuss How Corrupt is Britain?” →

The UK’s money laundering rules support debanking of poorer countries

By Alex Cobham, TJN’s Director of Research. Originally posted at his blog Uncounted.

Poverty – a bad money-laundering risk factor

The UK’s Financial Conduct Authority has revealed the basis on which it ranks jurisdictions as low or high risk for money laundering – and it seems inevitable that it will support debanking of poorer countries. Continue reading “The UK’s money laundering rules support debanking of poorer countries” →

New Report: Ten Reasons to Defend the Corporate Income Tax.

UPDATES

2018 – Tax incentives in mining: minimising risks to revenue, OECD/Intergovernmental forum on mining, minerals, metals, and sustainable development. “Tax incentives are costly, leading many countries to forgo vital revenues in exchange for often illusive benefits. . . there is little evidence that tax incentives are effective at attracting mining investment in developing countries.”

March 2017 – Tax Spillovers: a New Framework. Exploring how different taxes “spill over” – not just across borders, but also among different elements of one country’s tax system. By Andrew Baker and Richard Murphy.

2017 – Rise of ineffective incentives: New empirical evidence on tax holidays in developing countries Saila Naomi Stausholm Copenhagen Business School. “The effect of tax holidays on FDI is negligible and decreasing, and importantly, that it does not translate into neither real capital accumulation nor economic growth.”

Sept 2016 – New report disproves US corporations’ false narratives on tax – via Americans for tax fairness

Sept 2016 – Why we need to tax corporations now more than ever – via Kimberly Clausing

Aug 2016 – Corporate tax cuts: why the old analyses don’t stack up – via Fair Skat

Jan 2016 – The effect of profit shifting on the corporate tax base – Kimberly Clausing, TaxAnalysts. The point being that corporate tax cuts don’t make a dent unless your rates are already close to zero. (For wonks: “They find a nonlinear tax response, with far more responsiveness at lower tax rates than at higher ones. Findings indicate tax semi-elasticities of -4.7 at corporate tax rates of 5 percent and -0.6 at tax rates of 30 percent.”)

Oct 2015 – Options for Low Income Countries’ Effective and Efficient Use of Tax Incentives for Investment – G20, IMF, OECD, UN, World Bank joint report. Tax incentives don’t generally work, and have a high fiscal cost.

2014 – Determinants of Foreign Direct Investment in EU Countries – Do Corporate Taxes Really Matter? “Our results suggest that there is no statistically significant effect of corporate taxes on FDI.”

New Report: Ten Reasons to Defend the Corporate Income Tax.

Trillions in public spending at risk as attacks on corporate tax intensify

Today the Tax Justice Network publishes a landmark report entitled Ten Reasons to Defend the Corporation Tax.

The short summary document is here, and the full document is here. Continue reading “New Report: Ten Reasons to Defend the Corporate Income Tax.” →

PROGRAMME

DAY ONE – 25th June 2015

DAY TWO – 26th June 2015

What is Competitiveness? #1 Robert Reich

Poverty – a bad money-laundering risk factor

New Report: Ten Reasons to Defend the Corporate Income Tax.

Thank you!