The Christian Science Monitor is not my usual read, but I am also well aware that it is noted for good quality reporting. That's the case in a report published today on the widening probe into tax haven abuse in Europe, which I would recommend to anyone looking for a good summary of the situation.
What needs to be made clear is that there is nothing illegal about holding bank accounts in Liechtenstein and wanting secrecy as long as you pay the right amount of tax in your own jurisdiction.
That is, of course technically true. But to offer such a comment is also a way of denying the fact that this is not the way these things almost invariably work. The secrecy is designed to make sure that those with these account do not have to declare them because no-one knows about them. That's why people place funds in places like Liechtenstein, and not because it offers any real financial advantage. I do not believe Chas Roy-Chowdhury does not know that and as such I think his comment is deliberate obfuscation.
I might have lived with that though if he had not gone on to make further comment:
He says part of the objection is that smaller jurisdictions can afford attractive, low tax rates that result in "capital flight" from bigger countries. "Governments should open themselves up to the wind of global competition and accept that they need to run efficiently to keep tax rates low."
I am, to be candid, shocked that the ACCA let's him say such things, for these reasons:
a) This is blatantly political propaganda of a type which no professional body should promote if it is to retain that status;
b) Capital flight, as he should know, is usually illegal and has massive cost on society, especially in the developing countries of the world where the ACCA seeks to recruit much of its membership. By commenting as he does he either endorses the economic instability that tax havens create in the developing world in particular or he shows that he does not understand what capital flight is. Either way the ACCA should be worried that such a man is making comment on their behalf.
c) He should know, but clearly does not, that the 'low tax rates' to which he refers cannot be afforded by the smaller jurisdictions to which he refers. For example, a Liechtenstein foundation might be tax free for a non-resident person but is most certainly not for a Liechtenstein resident person. As such he should know that the model he is promoting is not sustainable, or transferable to large jurisdictions unless he is promoting the abolition of taxes on all companies and investment income. If he is then the ACCA has moved onto very dangerous political ground and must justify why it has done so.
d) By discussing tax competition in this way he should realise that he is promoting an assault on democracy itself. It is through the ballot box that tax rates should be set, not through the actions of parasitical principalities. That is the point others in the article make, that the debate is not on tax rates but on secrecy, a point that seems to have escaped him in his desire to promote his political agenda.
e) By diverting attention to this political agenda he seeks to divert attention from the fact that this whole issue is actually a debate about crime, and so long as there is tax there will be tax evasion if there is secrecy that allows it to persist undetected or undetectable. He should have resoundingly condemned tax evasion but did instead seek to apologise for it.
All this says to me that the ACCA has moved far from the mainstream, which might best be represented by this FT editorial comment which Chas Roy-Chowdhury appears to have been unable to endorse:
Helping evasion is distinct from legitimate tax competition. Monaco or Bermuda or Switzerland are fully entitled to set low rates of personal and business tax to attract wealthy individuals and companies to their jurisdiction. What is not acceptable is helping those who live elsewhere to evade the taxes that they owe.
It's another sad day for the profession.
Disclosure: I am a member of the ACCA's research committee, in which context I meet Chas Roy-Chowdhury. I am not a member of the ACCA.