Tax Havens
To tackle the cancer of corruption at the heart of the global financial system, tax havens need not just to reform but to end.
Professors from the world’s top universities such as Harvard, Oxford and the Sorbonne and from countries as diverse as Finland and Cameroon have united to warn global leaders that tax havens undermine countries’ ability to collect taxes, with poor countries proportionally the biggest losers. Despite having different views on desirable levels of taxation, they all agree that “territories allowing assets to be hidden in shell companies or which encourage profits to be booked by companies that do no business there are distorting the working of the global economy.
Late 20th-century financial liberalisation turned this already complacent calculation into something more lethal. With fortunes sloshing freely across borders, tax havens became voracious parasites on the world economy, most seriously sucking the life out of some of its poorer parts. The abuses are not only shocking, but staring us directly in the face. We didn’t need the Panama Papers to know that global tax corruption through the havens is rampant, but we can say that this abusive global system needs to be brought to a rapid end.
The current system allows the rich and powerful to hide money offshore, robbing countries of much needed tax revenue for essential services like healthcare and education. Millions of the world’s poorest people will continue to be the biggest victims of tax dodging until governments act together to tackle tax havens. Companies, trusts and other structures constituted in this shadow world must be refused access to the real one, so they can no longer steal money and wash it back in. No bank accounts, no property ownership, no access to legal systems.
World leaders have formally agreed to an overhaul of international tax rules that would impose a new global minimum tax on business profits of 15 percent. The agreement is intended to curb the benefits seen by large companies that shift profits overseas to tax havens, which supporters of the deal argue has limited the amount of tax revenue countries are able to collect.
The 15 percent tax floor will apply to corporations with revenues above €750 million (about $867 million), effectively limiting it to the world’s largest companies. Although an agreement has been reached, the challenge now is for the 136 countries to implement the new rules. For other corporations will be business as usual. For some, especially those looting serious money, the offshore attractions will remain. The world has been entertained by tax havens long enough.
Quote
It will not be long before those nations that opt to continue with old-style secrecy will be labeled pariah states and be cut off from the global financial system.
--Nicholas Shaxson