New report exposes tax injustice
A new report by Eurodad member organisation CNCD-11.11.11 exposes the systems that perpetuate tax injustice around the world and highlights some solutions that could remedy international tax injustice.
Key features of the systems include the following:
- Illicit financial flows are one of the main causes of resource depletion in developing countries, and this exodus of funds is mainly linked to tax avoidance strategies. That is the reason why tax justice is one of the main issues facing development finance today.
- Tax issues are still largely unregulated at an international level, and the little regulation that does exist is decided by unelected bodies such as the Organisation for Economic Co-operation and Development (OECD).
- Since 2009, the G20 and the OECD have been waging a war against tax havens, but today the war is over and tax havens are clearly the victors.
- The international legal standards on the taxation of multinationals allow these companies to shift their profits to tax havens like the Cayman Islands, thereby reducing their tax contribution to zero in the rest of the world.
- Tax treaties are supposed to allow for the exchange of relevant information between jurisdictions, but these can often be neutralised by the simple use of a bogus company or a trust. Other treaties are designed to prevent double taxation, but actually serve to provide double tax exemptions to some privileged tax payers.
- The “friendly” advice of international financial institutions to developing countries is to reduce taxes on investors and raise taxes on the poor instead.
CNCD-11.11.11 recommends that Belgian and EU policy-makers should take the following steps to tackle tax injustice:
- Global tax justice should be central to EU foreign and development policies.
- Tax issues should be included within bilateral cooperation treaties, if partner countries are willing to cooperate.
- Progress should be made towards more transparent and democratic global governance around tax issues.
- Stronger policies should be built against tax havens at the national and EU levels.
- The Belgian government’s tax treaties should be renegotiated.
- The “arm’s length principle” should be contested at the OECD level.
- Country-by-country reporting and other transparency initiatives should be supported.
- The policy bias of the International Finance Institution (IFI) for regressive tax systems should be contested.