I liked this form the Tax Justice Network:
The full report is here.
Note however two things.
The first is that the UK is not the biggest loser. Indeed, we're part of the problem.
And second, note that in the grand scale of things corporate tax abuse is not the biggest part of the tax gap. That biggest part is domestic tax evasion, largely by smaller companies and businesses, which outstrips tax avoidance in total by a ratio of at last 5 to 1, which is something tax campaigners will not give enough attention to because it does not attract headlines like this does.
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One question I have about the wealth stored in offshore havens like Cayman Islands: Is it possible to declare that wealth ‘null and void’? Refuse to allow it back and just replace it?
I know it sounds daft, bordering on ridiculous, and it probably is, but the UK has full control of its currency. If they have full control couldn’t they remove wealth that way as well as create it via the Bank of England?
I forget who did it, but one coutry announced that all high denomination notes were no longer valid currency and people had to exchange them quickly or lose the wealth.
COuld the UK do something similar, but electronically?
We could declare it null and voiod if we wished
But international law would no recognise that
Nor would the Caymans
And much of it in Cayman will not be British – it is in effect a US haven
I’m afraid no chance this would work and the tried would be enormous for little gain
That was in India in November 2016, when Modi withdrew R500 and R1,000 notes and replaced them with new R500 and R2,000 notes in a bid to fight black money.
Domestic tax avoidance may outstrip this by 5 : 1 – although some would argue:
Those funds are recycled largely within the country and so do add something to the economy.
If the international tax avoidance is addressed it makes countering domestic avoidance more palatable or ‘fair’
Note, that I do not personally subscribe to these views.
What is fair about some not paying their tax, whoever they are?
Good luck in persuading most EU member state to increase their rates of corporation tax (I think the average across the EU has not been above 25% for about 15 years) and to delegate authority to the EU to determine their tax base. It is the logical conclusion to adopting the same currency, but there won’t be much left for the individual member states to do on corporate taxes if the base and rates (and administrative processes, such as public country by country filings) are set for them centrally. Perhaps the UK leaving will make that process easier, although it could look a little like France, Germany, Italy and Spain bullying the smaller states to do their bidding. Admittedly, most won’t be too bothered as corporate income taxes form a very small amount of the overall tax take in most countries anyway.
And “taking [wealth and power] away from nurses and public service workers” – because tax pays for public expenditure? Perhaps someone needs to tell the TJN about modern monetary theory.
John Christensen gets it
I despair of many o9thers in tax justice
They think their existence depends on persuading people that tax pays for nurses, and it’s always nurses
That’s wrong but they believe that their case collapses without the claim
They’re wrong
I am deeply unpopular for saying this
I came across the same article last night as I am researching the issue of taxation for the website that I am building with a group of NGOs that work with youth. I live in Italy and the double morality of the Dutch during the current COVID-19 debate has been quite annoying, to say the least! I then checked the Acquis communautaire (conditions for joining the EU). Other than been annoyed about evasion, I am not a tax expert and wondered how Chapter 16 of the Acquis fits into this:
“The acquis on taxation covers extensively the area of indirect taxation, namely value-added tax (VAT) and excise duties. It lays down the scope, definitions, and principles of VAT. Excise duties on tobacco products, alcoholic beverages, and energy products are also subject to EU legislation. As concerns direct taxation, the acquis covers some aspects of taxing income from savings of individuals and of corporate taxes. Furthermore, Member States are committed to complying with the principles of the Code of Conduct for Business Taxation, aimed at the elimination of harmful tax measures. Administrative co-operation and mutual assistance between Member States is aimed at ensuring smooth functioning of the internal market as concerns taxation and provides tools to prevent intra-Community tax evasion and tax avoidance. Member States must ensure that the necessary implementing and enforcement capacities, including links to the relevant EU computerised taxation systems, are in place.”
Any comment on the issue Code of Conduct for Business Taxation”? The EU Parliament is proposing action against Hungary and Poland regarding the Justice related clauses of the Acquis. Why can’t the same action be taken against the tax haven Member States??
Action on anything but the acquis requires unanimity – so the tax havens rates can block it
Hence no action
What you do not say Richard is that the report shows that U.K. is about 5% of the problem while Luxembourg and Netherlands (much smaller countries) are 75% of the problem. The relative contributions of this profit shifting to the economies of Luxembourg and Netherlands must be many times greater than the marginal benefit to the U.K.
What is the error margin of this study, does the U.K. figure fall within it? It surprises me that Ireland does not come out “above the line” which makes me sceptical about the accuracy of the data.
So the EU has a couple of parasites in its midst. Who knew? What’s more it is powerless to do anything about it.
You would need to ask TJN
This is not my work