2007 – a year in retrospect

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2007 was a good year for tax justice.

Most important of all was a serous change in the development community. There is now significant support for the idea that the creation of effective tax systems is vital is developing countries are to end their dependency upon aid. There's also been widespread agreement that this requires the ending of the dual curses of corruption and capital flight which together cost the developing world more than $500 billion a year, none of which would be possible without the assistance of the supplies of corruption services in the world's tax havens.

The UN agrees with this argument: so too does the World Bank. Norway is leading the nations seeking to tackle this issue. Chile and other nations are providing active support. It's been good to work with them all in 2007.

The development of the Tax Justice Network has been another highlight of the year. Many countries in Europe now have active organisations, so does the USA, Canada is under way, and India is coming. And in Africa the work is developing well. There's much to celebrate in that.

TJN campaigns have gone well too. The IFRS 8 campaign has gone further than we might have dared hope when the idea of country-by-country reporting was created five years ago. With support from the EU Parliament it looks like this idea will run and run. I seriously expect country-by-country reporting to end up as a mandatory accounting standard now. Just don't hold your breath on the specific timing, that's all.

In the UK we launched domicile onto the political agenda in February. It's remained there ever since, attracting more attention than we could have dared hope for. Given the inadequacy of the government's current response this one is another issue that is destined to run, and run.

So will private equity to which we made a significant contribution to debate. Only the credit crisis and Northern Rock usurped this. This blog can, I think, claim a major role in the way the Northern Rock story developed by creating wider awareness of the abuse that securitisation represents. Again, this issue will not be going away in 2008.

The Tax Gap remained on the agenda. The report I prepared for the RMT on tax paid in the rail industry highlighted the steadily falling tax contribution of UK companies despite their rising profits. I can guarantee that this issue will definitely be on the agenda in 2008. It has been the focus of my research of late.

That research work will concentrate on tax havens in 2008, and 2009. I have a research grant to enable me to undertake much more work in this area. I am delighted abut this. The harm that tax havens cause to the developed and developing world is still largely untold. The persistence of the abuse is depressing, but there are welcome signs. The EU Code of Conduct on Business Taxation was used to require reform of the Isle of Man's abusive tax laws.

Jersey's black hole is getting bigger, its financial services sector more innovative in promoting abuse and wishing to silence its opponents. I have no doubt that this was a motive for the criminal accusation levied against me and my colleague John Christensen during the year, which inexplicably took five months for the Jersey police to clear when it was apparent that the attack was politically motivated, and the accuser had lied. Such conduct is, however, typical of a place where corruption is widespread and the abuse is ignored by almost everyone.

What does this all add up to? At the beginning of the year I wrote about what success in my work would look like. I said:

1) An end to aid dependency in developing countries because they are able to meet the needs of their populations from resources that their own elected governments can raise from transparent taxation of thriving economies;

2) An assumption that transparency is the norm for all business transactions and all entities created under statute law (companies, charities, limited liability partnerships, trusts, foundations and all the variations on this theme, plus material private entities and partnerships) disclose their ownership, constitution and accounts on free access public record;

3) The ending of 'secret spaces', be they created by tax havens, or as subsidiaries hidden within groups, or behind trusts, nominees and other such arrangements;

4) International tax cooperation in pursuit of corruption (tax evasion) and anti-democratic activity (tax avoidance) is the norm in all territories;

5) Progressive taxation so that each contributes to society according to their capacity to pay.

These remain true, although I think I should have added:

6) People of similar income and social circumstance in any society pay similar taxes, what ever their source of income.

I'm not pretending that any of these were achieved in 2007. But I think those working on tax justice can say that real progress was made on a number of fronts in the year, and for that I am grateful, and thank those who have given support in so many ways over that year; it has been appreciated.


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