Apply to TJN’s Illicit Finance Journalism Programme
We are delighted to issue a call to journalists and campaigners to attend the fifth Illicit Finance Journalism Programme (IFJP).
TJN’s financial investigative journalism training course takes place in London between Tuesday 12 May – Friday 15 May 2015 at City University London, Northampton Square, EC1V 0HB Continue reading “Apply to TJN’s Illicit Finance Journalism Programme”
29th January 2015 – UPDATE: Here is a copy of the civil society response to the Financing for Development ‘Elements’ paper that acts as the starting point for the first drafting session today in New York.
Guest blog from Christian Aid’s Dr Matti Kohonen in New York
Snow blizzard was gathering around the UN building just on the eve before the first Drafting Session for the Financing for Development (FFD) talks in New York January 27-29 and the UN exceptionally had to shut down for the first day as a “state of emergency” was called by the New York Mayor De Blasio over the storm.
However, snow wasn’t the only source of concern as the UN is also snowed under by the demands from developed countries who still think that financial issues are not in the domain of the UN.
Leaving the financial issues outside of UN institutions makes no sense as the Sustainable Development Goals (SDGs) to be agreed in September 2015 will require an estimate €2.5 trillion in new financial resources per year in developing countries[1], while the unmet financing demands to adapt and mitigate climate action also rise to hundreds of billions of dollars.
How can the UN deliver on ambitious goals on inequality and climate change without institutions that ensure predictable financing?
If the period from the last FFD summit in Doha in 2008 has taught anything it is that ignoring systemic issues around tax dodging, secrecy jurisdictions or opaque private finance won’t help developing countries any more than developing countries. It is the lack of attention to these issues that led to the global financial crisis and its catastrophic aftermath in terms of the impact on many developing countries.
The discussions on the FFD started with the publishing of the Elements Paper[2] on the 22 January, laying out the structure of discussions and key questions for member states. The worry of civil society is that it does depart from the Monterrey Consensus of 2002 and Doha outcomes of 2008 in important ways. Similar changes were already visible in the expert commission report on sustainable development financing[3] and the UN secretary General’s report on post-2015 and financing for development[4], but now they are confirmed.
For instance, domestic private resources are to be discussed together with international private finance rather than domestic public finance. This could be interpreted as domestic private resources no longer being seen as part of the sovereign policy space of developing countries, but as an extension of global financial markets. On the positive side, a greater focus on illicit financial flows in the domestic resource mobilisation chapter shows the centrality of tax and financial secrecy issues on the FFD agenda.
A whole new chapter is given to the role of a ‘data revolution’, but most of the new data is to be from developing countries budgets and development outcomes, rather than secrecy jurisdictions or the accounts of multinational corporations. This raises concern over the integration of the financial transparency agenda in the FFD process – while illicit financial flows are mentioned as a resource for development the ‘data revolution’ seems to miss this area of data.
There is a general positive recognition that the FFD process is more integrated this time around to other processes – namely the Sustainable Development Goals (SDGs) and sustainable development issues emerging from the Rio Earth Summit of 1992 and the subsequent Rio + 20 principles. But integration of new areas does not mean reinventing the wheel – rather continuity and relevance are key in keeping the wheel turning in tackling difficult issues around financial resources.
Just as Mayor Bill de Blasio asked New Yorkers to “prepare for something worse than we have ever seen before”[5], so should the co-chairs of FFD process Mr George Talbot of Guyana and Geir Pedersen of Norway as co-chairs prepare UN member states for worse storms and greater inequality that lies ahead unless all forms of financing for development are scaled up – and especially tax as the most certain of all resources.
Then the (snow)ball is with the member states, and as the snow ploughs work their way through and opening the avenues and streets for genuine dialogue over new initiatives such agreeing on an intergovernmental UN tax body at Addis Ababa.
[1] http://unctad.org/en/publicationslibrary/wir2014_en.pdf , http://unsdsn.org/resources/publications/financing-for-sustainable-development/
[2] http://www.un.org/esa/ffd/wp-content/uploads/2015/01/FfD_Elements-paper_drafting-session.pdf
[3] https://sustainabledevelopment.un.org/content/documents/4588FINAL%20REPORT%20ICESDF.pdf
[4] http://www.un.org/ga/search/view_doc.asp?symbol=A/69/700&Lang=E
[5] http://www.usatoday.com/story/weather/2015/01/25/northeast-possibly-historic-blizzard/22310869/ ?
Continue reading “Financing for Development talks snowed under in New York”
From an article by UK journalist Paul Mason, published on the eve of the Greek vote:
“As for the Greek oligarchs, their misrule long predates the crisis. These are not only the famous shipping magnates, whose industry pays no tax, but the bosses of energy and construction groups and football clubs. As one eminent Greek economist told me last week:
“These guys have avoided paying tax through the Metaxas dictatorship, the Nazi occupation, a civil war and a military junta.”
They had no intention of paying taxes as the troika began demanding Greece balance the books after 2010, which is why the burden fell on those Greeks trapped in the PAYE system – a workforce of 3.5 million that fell during the crisis to just 2.5 million.”
Continue reading “Quote of the day: tax-evading Greek oligarchs”
Today a coalition of 17 UK organisations including TJN, ActionAid, Oxfam, Christian Aid, the NUS and the Equality Trust is launching a campaign to tackle the scandal of corporate ta avoidance in the run-up to the next UK general election in May. Continue reading “UK campaigners call on political parties to adopt tax dodging bill”
From Fortune Magazine, an investigation into Luxembourg’s shady corporate dealings:
“The mailbox marked AIG/Lincoln—the name of a partner of the New York–based insurance and real estate giant AIG—is empty and unlocked. Moments later, in the company’s fifth-floor office, I meet AIG/Lincoln’s employee (introduced as the sole one), who, as it happens, also works for the roughly 30 other companies housed in the modest suite.
When I ask how one works for dozens of bosses, the response is, “It is not very hard. There are no activities here.”
No earth-shattering news here: just a reminder of what really happens in tax havens, or (if you prefer) secrecy jurisdictions.
More on how Luxembourg became a tax haven, here.
The U.S., viewed from space
Update – Jan 2021 – Historic new U.S. legislation overturns the U.S.’ secret shell company legislation, weakening (though not eliminating) the U.S.’ status as a secrecy jurisdiction.
Update – April 2020. New research based on classified documents reveals an untold and previously secret history of how civil servants in the UK, in partnership with bankers (while excluding law enforcement officials) tailored US-devised money laundering policies to suit the needs of Britain’s financial services industry.
Update – March 2019 – The EU should blacklist the US as a tax haven. Oxfam America.
Update – March 2019 – Russian-Style Kleptocracy Is Infiltrating America. The Atlantic. “New York, Los Angeles, and Miami have joined London as the world’s most desired destinations for laundered money. This boom has enriched the American elites who have enabled it.”
Update – April 2018. Corporate Secrecy Fuels Human Trafficking in United States. Polaris.
Update 13 – Jul 2017 – The U.S. Is a Good Place for Bad People to Stash Their Money in The Atlantic – ‘America vows to promote financial transparency, yet it will let just about anyone register an anonymous shell company’
Update 12 – Jun 2017 – FATCA reciprocity watch: on US single-person LLCs, and more.
Update 11 – Jan 2017: The U.S. hasn’t signed the AEoI Agreement: Reciprocity demanded. Switzerland demands that the United States be less of a tax and secrecy haven.
Update 10, May 2016 – US tax havens – the new Switzerland (Financial Times). “I think the US is already the world’s largest offshore centre”.
Update 9, April 2016: How the U.S. became one of the world’s biggest tax havens – Washington Post.
Update 8: now in The Economist.
Update 7: See also this Bloomberg story entitled The World’s Favorite New Tax Haven Is the United States
Update 6: Jan 2016 – TJN calls for Fatca-like withholding taxes against financial institutions from USA and other financial centres.
Update 5: see our narrative report on how the United States became a secrecy jurisdiction. Also see Tax Analyst’s U.S. Ranks As Top Tax Haven, Refusing To Share Tax Data Despite FATCA
Update 4: see this Oct 2014 technical article entitled Hiding in Plain Sight: how non-US persons can legally avoid reporting under both FATCA and GATCA.
Update 3: more details on U.S. roadblocks from Value Walk, here.
Update 2: more details from Allison Christians, here, from 2013.
Update: Naked Capitalism in the U.S. has published an adapted version of this article, here.
If people stash their wealth or earn income overseas, that is fine with us — just as long as their tax authorities get the information they need to tax that wealth or income according to the law, and as long as money laundering and financial crimes can be effectively tracked, and so on. Where there are cross-border barriers to the instruments of democratic societies, then there is an offshore problem.
The only credible way to provide the necessary information is through so-called automatic information exchange (AIE), where governments make sure the necessary information is available across borders, as a matter of routine.
For years we at the Tax Justice Network were ridiculed for advocating AIE: pie in the sky, many people said. The OECD, the club of rich countries that dominates international rule-making on tax and tax-related information sharing, was for years pushing its so-called Internationally Accepted Standard which was, well, the internationally accepted standard for cross-border information exchange, despite being only slightly better than useless. The message was that we should just accept this, and move on.
How the world has turned since a couple of years ago. Continue reading “Loophole USA: the vortex-shaped hole in global financial transparency”
Click to enlarge. (Image: Actionaid)
ActionAid has just published a new report entitled Close the Gap! The Cost of Inequality in Women’s Work, which does that it says on the tin. It’s not just about tax, of course, but it contains much that is of interest to us.
Continue reading “New report: women, tax and economic inequality”
In the January 2015 Taxcast: how offshore is ruining the ‘Beautiful Game’: the Taxcast scrutinises football’s own goal. Also: how banks with criminal convictions are being allowed to continue to handle our money, how people may be allowed to apply for anonymity in the UK’s new register of beneficial owners of companies to be introduced in 2016, and the meeting of the world’s most powerful in that bastion of transparency, Davos, Switzerland. Plus more scandal and unique analysis.
“if we’re shifting competition away from the athleticism, the skill, the talent of the players and into the skill and talent of accountants, lawyers, bankers and board room executives, then the sport becomes a pointless thing to go and watch.’
George Turner
Featuring: John Christensen and George Turner of The Tax Justice Network, and Richard Murphy of Tax Research UK. Produced and presented by @Naomi_Fowler for the Tax Justice Network.
Download on your phone/tablet to listen offline here:
Listen and share via Youtube: http://youtu.be/1Sma2Slvh9o
Also available on iTunes: https://itunes.apple.com/gb/po
We just wrote a blog about tech giants, via a Financial Times article suggesting that they risk suffering reputational damage that could eventually be as bad as the reputational damage suffered by big banks.
Well, there’s another category that risks suffering the same fate in future. The Big Four Accountants.
This video from Spinwatch is from 2013, but it is worth repeating because not much has changed: in fact, we reckon that matters have got even worse since then. Continue reading “Who runs this place? ‘Policy development’ and the Big 4”
One might think that if a government wanted to impose austerity, its appetite for tax collection would rise. But this may not be the case. Take a look at this study from the European Federation of Public Services Unions (ESPU,) which came out last October but remains relevant. It’s called The Impact of Austerity on Tax Collection: One Year Later and Still Going Backwards.
And the key point is in the first summarising paragrah: Continue reading “Austerity: the tax dodgers’ best friend?”
Earlier this month Bloomberg reported that the European Union had stated that:
“Luxembourg hastily approved a “cosmetic” tax deal with Amazon.com Inc. in 11 days, allowing the company to shift profits to a tax-free unit. The EU told Luxembourg officials in a letter that the deal, based on a “cosmetic arrangement,” gives the Internet retailer an unfair advantage over competitors and doesn’t comply with global standards.”
In following analysis, originally posted here, guest blogger Dimitrios Kyriazis of University of Oxford examines the substance of the advance tax agreement struck between Amazon and Luxembourg and the problem this agreement poses for market competition in the European Union. Continue reading “Luxembourg, Amazon, and the State aid connection”
This guest blog from Dr Jairo Lugo-Ocando comes just a couple of days after the UK commentator George Monbiot wrote a piece in The Guardian entitled Our ‘impartial’ broadcasters have become mouthpieces of the elite, mostly from a Canadian and British perspective, in which he noted the extent of political ‘capture’ by financial élites: Continue reading “On the historical absence of inequality and tax in the news agenda”
Some political mathematics.
Here’s A: US tech giants launch fierce fightback against global tax avoidance crackdown. Reforms “must be resisted.”
Now B: The libertarian Cato Institute, funded by the billionaire industrialist Koch brothers, said it had received support from Google in the form of free web advertising. Among the issues on which this lobby group campaigns is taxation; it expounds the virtues of tax havens and has described the G20-led efforts to reform international tax as a “global tax cartel” plot. The lobbying, the lobbying. Continue reading “The political mathematics of tech giants”
From Jack Blum, a Senior Adviser to the Tax Justice Network, testifying to the U.S. Senate Committee on Finance:
“For years there has been very little offshore enforcement. There was a period in the 1970’s when IRS made some efforts in that direction. The cases were dismissed. The agents who were involved had their careers ruined and there was a 10-year hiatus in the 1980’s when offshore cases were simply not touched within IRS
….
it was a career killer… the cases were complicated and the cases always involved people who had access to the political system in a way that made the case not have a good future. So what happened was, not very much was done.”
Continue reading “Quote of the day: offshore enforcement as a career killer”
From Mark Textor, adviser to Australian Prime Minister Tony Abbott:
“We are entering the period of tax wars instead of trade wars,” he said. “People vote in governments to solve the problem, and giant multinationals not paying tax is a problem.”
One for the Tax Wars page. Hat tip: Mark Zirnsak.
Moves by the Swiss National Bank to remove the Swiss Franc’s currency peg to the Euro has prompted a new round of turmoil in global foreign exchange (FX) markets. We’ve already written about this from a tax justice perspective, but here’s something else.
Quite a few currency brokers have gone under in the latest storm, and several are under threat. Today’s Financial Times comments on this:
“it is the large number based in Cyprus and offshore that has thrown open a debate over one of the more shadowy areas of the City, which allows private individuals to use internet trading platforms to speculate on currency markets for slender stakes.”
Continue reading “Foreign exchange turmoil brings offshore centres into focus”
From Oxfam, a new briefing, based on updated Credit Suisse estimates. It contains the following factoids: Continue reading “Report: will top 1% have more wealth than the 99% in 2 years?”
It’s all so tiresome and predictable. This blog focuses on the UK, but it could apply to any oil and gas producing country.
The Guardian has a headline that is more to the point: Oil industry calls for North Sea tax cuts. Meanwhile, the lobbying arm of the British financial services industry fine upstanding British newspaper City A.M. has an innocuous-sounding headline: Government commissions “urgent review” into North Sea oil after BP job cuts, making similar points. Continue reading “Do not listen to Big Oil’s whining for tax cuts”
So the latest big tax haven whistleblower, Antoine Deltour, is facing the combined massed might of Luxembourg, one of the world’s biggest and most aggressive tax havens, and the Big Four accounting firm PWC, one of the biggest and most aggressive lobbyists for offshore tax and secrecy legislation.
Deltour faces up to ten years in prison. Continue reading “Will Antoine Deltour become a prisoner of conscience?”
There’s been a bit of pushback (of course) to our Finance Curse analysis, which some people think is just an empty slogan. It isn’t.
Our basic proposition is that hosting a large financial services industry can be like hosting an oil industry: there are many penalties associated with doing so, and in some cases those penalties may well outweigh possible economic benefits. Either way, things are never as good as one might hope, given the amount of cash sloshing in.
This image below isn’t new: it’s drawn from the original document. We’re posting it as a reminder of our thesis, which is slowly but steadily seeping out there.
Of course correlation ain’t causation, and one can quibble with the “GNI minus HDI” measure (that’s a UNDP measure, not ours). But you’ll agree that it’s a pretty striking graph, which tells a pretty clear story in support of our proposition.
For just one current example of *how* the Finance Curse operates, see yesterday’s blog focusing on the exploding value of the Swiss Franc.
We at TJN have always seen our Finance Curse analysis as an important complement to our work on tax havens / secrecy jurisdictions. Our offshore work is about how one country’s financial sector transmits harm to other countries. Our work on the Finance Curse speaks to a domestic constituency instead: how one’s country’s financial sector can be harmful for one’s own country. The two fit together, naturally.
Now read on.
From Bloomberg:
“The European Union said Luxembourg hastily approved a “cosmetic” tax deal with Amazon.com Inc. in 11 days, allowing the company to shift profits to a tax-free unit.
The EU told Luxembourg officials in a letter that the deal, based on a “cosmetic arrangement,” gives the Internet retailer an unfair advantage over competitors and doesn’t comply with global standards.”
Other cases are live against Fiat, Starbucks and Apple. From European MEP Sven Giegold, via email: Continue reading “Tax wars: Europe lands blow against Amazon”
A second quote of the day, from U.S. Senator Elizabeth Warren, following our quote from Switzerland earlier:
“If large financial institutions can break the law and accumulate millions in profits, and if they get caught, settle by paying out of those profits, they do not have much incentive to follow the law.”
And so it goes. Continue reading “Quote 2 of the day – Big Banks, Credit Suisse, and financial crime”