Re-Define produces solutions to current and long-term public challenges and helps policy makers implement them
Tax Havens
Tackling Tax Havens - Adressing Fiscal Deficits, Financing Development and Stabilizing Finance
Anna Gibson, Research Associate, Re-Define
The German government recently decided to purchase stolen data revealing tax avoiders hiding money in Swiss bank accounts. This is a risky move diplomatically, but, for Germany, the gains from tackling this tax flight appear to outweigh the risks. It is also illustrative of the proliferating efforts by individual governments and the international community to clamp down on tax flight: the loss of tax revenue due to cross border tax evasion or avoidance.
However, the recent spat between Switzerland and Germany is merely the tip of the iceberg; symptomatic of what is one the most serious systemic failures of our time: the lack of intergovernmental cooperation on cross-border financial matters.
In order to capture the true extent of this failure and seek sufficient and holistic remedies, the current discussion can be crystallised into three central arguments: the effect of tax havens on fiscal revenue, development finance, and the stability of the financial system.
Sony Kapoor Interviews on Recovery, Financial Regulation, Taxation, Inequality, Unemployment and Governance
Re-Define Managing Director Sony Kapoor sat down with the Real News Network on one of his visits to Washington DC and gave a series of wide-ranging interviews on the difficulty of getting the right financial regulation, the extreme fragility of the economic recovery, the sheer scale of the problem of rising unemployment and stagnating wages, the problems of collective action faced by institutions and governments and a number of other topical issues including the question of what should be done with institutions such as Goldman Sachs. These can now be accessed in our Audio/Video resource section http://www.re-define.org/audiovideo.
Miles to Go Before the G-20 Sleeps (Published as a Comment Piece on Thursday to coincide with the G-20)
Inappropriate regulations, macroeconomic imbalances and serious gaps in international economic governance helped amplify the financial crisis but will not be addressed adequately by the G-20.
How the current discussion on Tax Havens is missing the point?
The current discussion on tax havens is missing the point - So what do we really need to doThe discussion is generating headlines but precious little in the way of tangible progress. This is a wasted opportunity a this political space is unlikely to open again and as William Buiter has sensibly remarked that it is better to over-regulate and then loosen up than to wait for the financial community to get back up and thwart any real efforts at change.
So what are the problems that Tax Havens contribute to?
- Tax Evasion/Avoidance by OECD country citizens
- Tax Evasion/Avoidance by Developing country citizens
- Tax Evasion/Avoidance by Corporate Entities
- Regulatory Arbitrage
- Money Laundering etc
Of these the discussion on reducing (no one is eliminating bank secrecy) bank secrecy is likely to have a modest impact on Tax evasion by OECD country citizens and not much else. Precious little other change is being discussed.
The first problem is that the issues being discussed for change are bilateral tax information exchange treaties. One quick look and we realize that more than 18,000 of these would need to be negotiated in order for all countries to be covered. This is not only inefficient but is also something that will almost never happen. Developing countries in particular, which lose hundreds of billions every year to capital flight will continue to lose out as tax havens negotiate TIEA’s with select countries which belong to the OECD or G-20.
