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Tax Me if You Can

Tax Havens
‘It is estimated that as much as 32 trillion dollars are held offshore in secrecy jurisdictions, escaping just taxation. Every year governments worldwide, developed and developing economies, lose huge sums of tax revenue through various schemes of tax avoidance and evasion, and hitherto most perpetrators have enjoyed impunity.’

The above words were written by one of the world’s experts on tax havens: Alfred de Zayas, Professor of International Law and a UN Independent Expert on the promotion of a democratic and equitable international order. Professor de Zayas devoted his 2016 General Assembly report, which he presented on Oct 20 to tax havens and is our guest on this program.

Professor starts off by giving some background information on what tax havens are. He describes them as being secret places where money is stored to escape any kind of monitoring and thus the necessity to pay taxes. Apparently, there are over 100 such tax havens and this is much bigger than most people realize. Few people know, for example that the US has a major tax haven in Delaware. These tax havens have not evolved naturally, or been created by accident, de Zayas mentioned, but created by governments.

UN expert expresses that globalization is not a bad thing but we want to see everybody benefiting from world trade, not just the Davos elite and other groups of secluded people who hold most of the world’s wealth, and gather it in a way that gives them tax immunity. Professor de Zayas, interestingly, is supportive of free trade agreements but against the inclusion of investment protection chapters, which create privileges for investors because states cannot sue the investors.

Host John Harrison suggests that to stop tax havens would involve cooperation between countries, but we are now moving into a situation of fragmentation, not global unification, making any such efforts more difficult.

Globalization is a fact of life, and trade volumes are measured by trillions of dollars. It is, however possible to stop big business using tax havens, which are created by illegal collusion of large auditing, accounting, law firms, banks and executives.

Despite the prevalence of tax havens all over the world, de Zayas sees a change in mind sets taking place over last 10-15 years, away from the extreme neoliberalism. That’s why, he says the European Commission, for example, has taken this on in regards to cracking down on large corporations such as Apple, Google and Fiat who use Ireland as a tax haven and who owe billions of dollars in unpaid taxes. It is important to impose high penalties to make it clear to individuals and transnational corporations that they stand to lose vast sums of money if they continue to avoid taxes, and to try to create shell companies.

Professor suggests the introduction of an inter-governmental tax body under the auspices of the UN with a mandate to elaborate a UN convention on tax avoidance. He is also working on an internationally legally binding treaty of corporate and social responsibility, which would include an obligation on the part of transnational organizations to pay taxes. It is useful to know that legal action is now being taken to create the infrastructure whereby tax avoiders can be persuaded to pay; this gives us all hope.

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