Trust me, asymmetry matters

Posted on

There is good news this morning. As the FT notes:

Luxembourg has agreed to hand over a list of the hundreds of tax deals signed with some of the world’s largest businesses after initially promising to take the European Commission to court in a bid to keep them secret.

The expectation is that the Commission will now ask for all EU states to supply the same data to them.

My hope is, of course, that the EU will then supply that data on to the states impacted by such deals because this is the core issue here. The fact is that there is asymmetry in the dealings between a company (indeed, any taxpayer) and the state. The taxpayer knows what they have done and the state does not. The result is that power is always, to some degree, with the taxpayer. The issue I have spent a decade or so addressing is the fact that some states have deliberately gone out of their way to increase this asymmetry by providing secrecy from within their jurisdiction to make it harder still for another state to find out what the taxpayer has been doing. This is the whole core of the tax haven issue.

Luxembourg is a prime example of this. As I said in the Luxemburger Wort yesterday, it is a parasitical state (which I am sure went down well locally) that has deliberately exploited its ability to create law to undermine the capacity of other states to enforce theirs. This is what secrecy jurisdictions do. It is why I and others have worked to stop them. But the EU has to play its part in ensuring that happens by exchanging all the data it secures now with the states impacted by it or its investigation on competition law will not deliver the desired level playing field on which businesses can compete fairly, and that is the aim. Asymmetry undermines that aim. That's why its deliberate creation has to be defeated.