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”
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.
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?”
By Alex Cobham, TJN’s Director of Research. Originally posted at his blog Uncounted.
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”
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.”
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.”
[vc_row][vc_column][vc_column_text]From the BBC in Jersey:
“HSBC is closing all accounts in Jersey for customers living in the UK, as part of industry-wide efforts to check identity and address details, to ensure off-shore accounts aren’t being used to hide money. Jersey’s Chief Minister Ian Gorst insists that banks have to comply with legislation.”
So few words, so much to say about them.
We have at least six questions. Continue reading “Six questions about HSBC and the Jersey connection”
From Good Jobs First in the U.S., a new study looking at the many and varied grants, tax credits and subsidies harvested by large companies. (Also see our Taxcast interview of Greg Leroy, along with an interview with Kevin Farnsworth, who has done similar work on corporate welfare for the UK.)
The press release for the new report, entitled Uncle Sam’s Favourite Corporations, begins:
Federal “Corporate Welfare” Database Now Online
Study: Large Corporations Dominate Federal Subsidy Awards; Banks, Foreign-Owned Energy Firms and Federal Contractors Among the Biggest Recipients
Two-thirds of the $68 billion in business grants and special tax credits awarded by the federal government over the past 15 years have gone to large corporations. During the same period, federal agencies have given the private sector hundreds of billions of dollars in loans, loan guarantees and bailout assistance, with the largest share going to major U.S. and foreign banks. Continue reading “New study outlines trillions handed out in U.S. corporate welfare bonanza”
Andorra has just over twice the population of Liechtenstein, and looks (and behaves) a little like it too.
Our quote of the day comes from the introductory paragraph of a Reuters story:
“With Andorra now added to the list, how many more examples do we need to see the folly of combining a small country with a large banking system?”
That’s our quote of the day. The lead angle of the story is one of financial stability: it asks if this is Cyprus, all over again. Banking assets in Andorra are over six times GDP, with assets under management worth the equivalent of 17 times GDP. The rating agency Standard & Poor’s has just cut Andorra’s credit rating to two levels above junk. Following in the small-country theme, Reuters also cites:
“those financial crisis examples of Ireland and Iceland, both of whom enjoyed the fruits of wild-west banking for a time only to see it end extremely badly.”
Continue reading “Small countries, big banks: is Andorra the new Cyprus?”
The European Trade Union Confederation (ETUC) was established in 1973 to represent workers and their national affiliates at the European level. It has just adopted the following resolution on tackling tax evasion, avoidance and tax havens. Continue reading “European Trade Unions Congress on tackling tax evasion, avoidance and tax havens”
From Tax Justice Network Africa, via its Afritax feed, a video showing a Zimbabwean member of parliament, James Maridadi, taking the Minister of Finance to task on revenue from Marange Diamonds.
The brief exchange is worth watching, not least for the Minister’s evasive manoeuvres. But it’s mostly an excuse for us to draw readers’ attention to an older, fantastic video by Al-Jazeera, who sent a couple of reporters undercover, posing as corrupt Zimbabwean officials with a fistful of diamond dollars, to the exceedingly mucky tax haven of the Seychelles.
Continue reading “Where did Zimbabwe’s diamond revenues go?”
From Oxfam, a new report whose headline we’ve copied. As the introduction notes:
“Making tax fair is one of the key solutions if we want to tackle the growing problem of inequality. Data from 40 countries shows the potential of well-designed, redistributive taxation and corresponding investment by governments to reduce income inequality driven by market conditions.
Finland and Austria, for instance, have halved income inequality thanks to progressive and effective taxation accompanied by wise social spending. Unfortunately, at present, almost all countries suffer from increasingly large scale tax dodging schemes used by big multinationals and wealthy individuals. this deprives all governments of much needed resources to finance essential services, but especially affects developing countries.
The European Union has been at the forefront of the fight against tax dodging over the past five years. Since 2011, several tax reforms have been adopted as first steps towards greater tax fairness. relatively good progress has been made to tackle tax evasion of private wealth (including issues such as automatic information exchange in europe, and transparency of beneficial owners in the anti-money laundering legislation).
However, less attention has been given to putting in place the right legislative measures to tackle corporate tax avoidance, including knowing where companies pay taxes, harmonising tax bases in europe and supporting ambitious reforms at an international level. recent corporate tax dodging scandals have unequivocally reminded us that despite some progress, plenty remains to be done if we truly want ‘banking secrecy to be over’, ‘the end of tax havens’ and a definitive end to tax evasion and avoidance.”
Another day, another political party funding scandal.
This time it’s (again!) the UK, and its third largest party the Liberal Democrats. We will start with a quote.
“Tax-haven lobbyists and beneficiaries have captured and corrupted our party political fundraising.”
That’s not us saying it: it’s Donnachadh McCarthy, former Liberal Democrat Deputy Chair. And he should know. On this month’s Taxcast (our monthly podcast, out on March 21) you’ll hear how he tried for years to get the Liberal Democrats to tackle the scandal of party political funding. Until he realised that: Continue reading “In the next taxcast: democracy for sale, via tax havens”
A year ago today’s TJN blogger wrote an article for The American Interest magazine entitled Putin, the U.S. and the City of London: The Much-Too-Special-Relationship. It made the bold statement:
“The truth is that the City of London is a greater potential threat to the national security of the United States than almost anyone supposes.”
And it quoted Ben Judah, author of a controversial New York Times article on the subject, as saying:
“Britain is ready to betray the United States to protect the City of London’s hold on dirty Russian money. And forget about Ukraine.”
Well, in that episode the angry words were largely confined to the media. Now we have another episode where the U.S. government is getting involved directly, pointing out that the City of London seems to have led the UK away from its traditional alliance with the United States.
It is just as we predicted then, and continue to predict. This time, it’s not Russia but China. Continue reading “City of London helps UK ‘betray’ US again: this time it’s over China”
click on the chart to enlarge
Yesterday, we re-posted a blog about the Irish Celtic Tiger myth from the Fool’s Gold site to the Naked Capitalism blog. The blog seeks to debunk the myth that tax “competition” was crucial to Ireland’s development in the 1980s and 1990s. Continue reading “Quote of the day: the Irish template for corporate bullying”
From the Fools’ Gold Blog, a new TJN-backed project on ‘competitiveness’. This article has also been cross-posted with Naked Capitalism.
Update, 2019: This issue is explored much more fully in the Celtic Tiger chapter in the Finance Curse book.
Ireland has long been a poster child for corporate tax-cutting. The standard argument goes something like this. “Ireland has very low corporate taxes . . . Celtic Tiger . . . just goes to show that corporate tax cuts grow your economy.” This argument is popular in Ireland too where government officials like to call the flagship 12.5 percent corporate income tax rate a “cornerstone” of industrial policy.
But is any of this even true?
Well, now take a look at this little graph. Continue reading “Did Ireland’s 12.5 percent corporate tax rate create the Celtic Tiger?”
This is the first newsletter of the Global Alliance for Tax Justice. For the full version, with images, click here. To sign up for GATJ’s newsletter, please click here.
Welcome to the first newsletter of the Global Alliance for Tax Justice (versión en español abajo).
Happy International Women’s Day
Gender equality and tax justice are top of our agenda with two events as we celebrate International Women’s Day.
We will also host a Women, Equality and Tax Justice workshop at the upcoming World Social Forum in Tunisa. Continue reading “First newsletter of the Global Alliance for Tax Justice”
This press release was put together by a group of organisations including TJN.
Expert Global Commission Responds to One-Sided Tax Debate; Inaugural Meeting to drive changes ahead of Post-2015 Ambition
Responding to widespread anger about corporate tax avoidance, the impacts of such avoidance on inequality and poverty, and concerns that current tax reform processes are inadequate, a new nonpartisan body— the Independent Commission for the Reform of International Corporate Taxation (ICRICT)—has been established to propose reforms from the perspective of the public interest. Continue reading “New Expert Global Commission Responds to One-Sided Tax Debate”
TJN has been incubating a new project to look at the issue of the ‘competitiveness’ of nations, a subject that has been dear to our heart for a long time. With help from the University of Warwick in the UK, the idea is to create new communities and discussions over this subject.
While tax ‘competition’ (which we prefer to call tax wars) is a core issue for the new project, it will look at ‘competition’ between jurisdictions on other issues such as secrecy, lax financial regulation, and other areas of public policy where measures to protect the public interest are being degraded in a race to the bottom.
The first element of the project is a new blog, just launched, which will collect analysis on this huge and multi-faceted issue. This new blog about ‘competitiveness’ is called Fools’ Gold, for fairly obvious reasons, and its url is foolsgold.international.
Follow it on twitter, here.
Though the project (purely for reasons of manageability) will initially focus fairly strongly on the UK, the aim is to widen discussions over time to include a range of countries, rich and poor, around the world. We hope to engage academics, professionals, journalists, and many others in creating a community of people to tackle these issues and skewer the popular myths out there.
For more details, read the introductory Fools’ Gold blog, here.
Not in favour of transparency
Father William Taylor, an elected member of the City of London Corporation, has blogged an interesting exchange he had last week with Mark Boleat, who chairs the Corporation’s Policy Committee. The crux of the exchange is that the Corporation will not be supporting the proposal before the UK parliament for a public registry of beneficial ownership (i.e. the true owners of a company) on the grounds that this is a unilateral measure and transparency should only be adopted through a “coordinated international approach”. This sounds very much like the City telling the government to kick the whole project into the long grass. Continue reading “City of London Corporation in ‘failure to support transparency’ shocker”
TJN’s Andres Knobel has just had his article, The Next Rising Tax Haven, published in the Spring edition of the World Policy Journal. As the following extract suggests, the rise and rise of a tiny wealthy elite, who will go to great lengths to avoid paying taxes, means that tax havens are adapting to meet the demands of a plutocratic world order:
Continue reading “The Next Rising Tax Haven”
Mick Moore will talk as a political realist and Alex Cobham, Research Director of the Tax Justice Network, as a magical realist.
Inequalities in various forms have been rising in most parts of the world since the 1980s, but only recently has inequality begun to attract mainstream attention, including from the IMF and the World Bank.
How should the development community react to this newfound recognition of inequality or inequalities as a core element – and core problem – of development? What contemporary forms are inequalities taking, and how do they relate to diverse forms of injustice? How can these be understood – and tackled? Where are the opportunities within development to exercise intellectual leadership in this rapidly growing field?
Continue reading “Event: can low income countries ever tax transnational corporations?”
Jörg Wiegratz
Guest blog by Jörg Wiegratz, lecturer in political economy of global development, University of Leeds
We’re getting rather used to revelations about sharp practice in the banking sector. The row about HSBC’s tax services to rich clients has raised, yet again, crucial questions about the business culture which allows such scandals to emerge. Continue reading “Bankers have a moral compass, it just may not look like yours”