More from the OECD tax conference in South Africa:
The OECD's Deputy Secretary General, Pierre Carlo Padoan, says capital flight to tax havens is harming the continent's development.
He says while Africa is beginning to fulfil its economic potential, better tax revenues are needed to finance the infrastructure and the skills needed for a vibrant economy.
Read the front page of the TJN web site and you'll see we've been saying this longer than just about anyone.
Now there is no room left for anyone to argue. Africa says it. The OECD says it. The fact that tax havens don't agree makes no difference: it's a fact that they deny, but that does not change the truth.
It's why we promote Country by Country reporting.
It's why we have promoted our Code of Conduct.
Together they could make a massive contribution to solving this crisis.
So why are the International Accounting Standards Board, the UK's Accounting Standards Board and the tax and accounting professions as a whole ignoring this issue? Is it that they want to make poverty a reality? What other explanation is there?
My plea is simple: accountants could change the world. Please do it. We have a greater capacity to achieve this than anyone. We cannot duck that responsibility.
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‘accountants could change the world.’
Accountants can describe the world, can help us understand the world but the point, as we know, is not merely to understand the world, but to change it. And that requires technological change, the passing of time, and force; not just accountants.
This is a dangerous misconception … tax havens do not cause tax loss….. Western corporations use tax havens to route taxable profits back to their home territories (otherwise we are talking domestic tax crime!). So say $100bn of taxable profit is rerouted to home territory with $30bn of tax paid to home terriory and then that government gives AID to Africa of £1bn with many strings attached!! If the tax loss was stoopped Western govt would loose their cut .. which is why no action is being taken. Your governments are complicit in the looting of Africa. Don’t blame the bus (tax havens) for the criminals riding on it.
Trevor Manuel does not agree with you.
He does agree with me.
I take that as persuasive.
Why is he wrong?
Trevor Manuel is the guy who agreed to pay off the western banks for their illegal loans to Apartheid South Africa … shifting a war burden onto the poor, making the victors pay for illegal loans to used to arm murders. (US did not honour Confederate debt!) Trevor may have credibility with you…. but not much in most of Africa. I am not aware of any place that he has faced and challenged the correct analysis. There has been tax loss from SA during all the years of Apartheid… but it was mostly not from foreign corporations but from South Africans rushing their money out and naturally into tax havens (I witnessed this process from the UK)… convinced that apartheid would fail … so in SA they focus on local capital flight … this is not the key issue for the rest of Africa … one African finance Minister who followed the correct analysis was promptly assassinated …so it is not always good for one’s health. In any case Trevor is a supporter of foreign corporations (they recommended him to Mandela!) so it is unlikely he would embarass them.
African Boy
I agree SA citizens did and do rush their money out of SA. We are concerned about that. So is SA. I cannot see why you use that as reason to criticise Trvor Manuel. Have you not heard of the Scoirpions who tackle such abuse?
As fdor saying capital flight is not an issue for the rest of Africa, respectfully, that is absurd. What is your evidence?
And please, if this debate is to continue confirm your identity.
Richard
Careful … I said ‘not the key issue’. I did not say it was not an issue. The billions lost in taxation by foreign MNC’s leads to unsustainable econmies and the policies of IMF lead to devaluation together the only rationale economic choice is ‘capital flight’. One should address the key problem not the symptom. I never criticised Manuel for focussing attention on capital flight. I criticised him for agreeing to repay apartheid debt and implicitly for failing to address corporate tax abuse. In one African country over 10 years the oil companies only paid $500m in taxation!
OK, we’re converging
What’s the key issue for you?
Richard
So you like asking easy questions? Perhaps its the university teacher in you!
key issues:
1. Corporate tax abuse through transfer pricing and abusive evasion with profits returning to the home country; the amounts exceed all AID and other public transfers by a large multiple.
2. Western government’s knowing complicity in this looting; throughout all the reform processes and IMF restructuring that they made no effort to improve local tax administration monitoring of foreign corporations is a smoking gun;
3. western government, economists and intellectuals construct a smokescreen focussing on corruption, tax havens and accountants/lawyers that divert attention from corporate/western government plunder.
4. Iran/ contra where the money laundering was done by the White House; Elf/Acquitaine where the French President, his Chief of the Security Services and he Finance Minister engaged in systematic looting for private benefit of African oil revenues; Al Yamama arms deal where the fraud investigation is stopped by the British PM no less to prevent the leak of venerable names of the British establishment receiving backhanders…( I name only the better reported instances) none of this is caused by tax havens, accountants/lawyers etc.
5. the western citizenry needs to be alerted to what is being done in its name .. the unlimited looting of Africa.. this is a good starting point..
6. greater focus on regulated markets .. it is market abuse that allows excess profits from which tax evasion arises. A competitive regulated market would reduce profits to normal and eliminate most (but not all) of the evasion.
In terms of positive steps I would confirm: western citizen awareness and greater focus on regulated markets to prevent monopoly abuse by foreign corporations would go a long way to reduce the problem to an everyday issue of tax administration ..
My last comment:
does no one notice the humbug of Trevor Manuel agreeing to repay billions of apartheid war debt AND THEN complaining about capital flight! Misdirection if ever there was such a thing.
Africa Boy
Looks like we’re 98% in agreement
You just don’t like Manuel
I think his commensta re fantastic and incredibly helpful
And the analysis we’re as one
Why not join the Tax Justice Network?
Richard
Could this be because tax avoidance/mitigation schemes are so incredibly profitable for accountants?
Alex
You are right – 100% right
Richard