Tackling Tax Evasion, Avoidance and Havens.

Transcription

1 Tackling Tax Evasion, Avoidance and Havens. Defining and scope of each. Tax Competition/Tax Wars The Tax Power Brokers Digital Economy, Reform in US impacts on EU, Bank Secrecy & Automatic Exchange of information OECD BEPs reform Dealing with Tax Wars Recommendations & Conclusion 1

2 I like to pay taxes, with them I buy civilisation, Oliver Wendle Holmes Jr, US judge, 1927 Report done for European Trade Union Confederation & ETUI. Recommendations adopted 10 th March 2015 (one amendment) by union centres of 28 MS & confederations Paper at ETUI 2

3 The Rise & Stabilisation of Govt Revenue 3

4 Taxation & the Size of the State. Public revenue in advanced economies from under 20 percent in the 1950s to around 43 percent in Govt Revenue 47% in Euro area & Public Expenditure at 49.5% GDP in 2014 Ireland 36% Rev & 41% (but of GDP) Size of state has grown to 45-57% of GDP in advanced EU economies Will remain in this region for long time 4

5 The Size of the State. Size is largely a given outcome Debate is less on size of state Contest is how taxes are raised and how they are spent Small changes in govt period of office Inequality is key, but tax being used to boost it 5

6 Tax Evasion. Is illegal -non or underpayment of tax Criminal activities but much is big and small forms Black or Shadow economy Estimate to be 18/19% of EU GDP Globalisation facilitead it greatly Now being addressed Bank Secrety 6

7 Tax Avoidance It is the use of legal methods, exemptions allowances etc to reduce a persons or firm s tax liability It is widepread among the global rich (the 1% +) and many MNCs Costs tens of billions in lost taxes. Kofi Annan, former UN head, said public anger at its unconscionable scale by MNCs means reform has become a long hanging political fruit. Ireland a Hub for Avoidance 7

8 The Double Irish- to be abolished 8

9 Replaced by the Patent Box -more tax free goodies for corporates, including even repayment of workers PRSI, if no CT due! 9

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11 Tax Havens Without tax havens and bank secrecy organised crime would shrink Great for many rich people too and tax-avoiding companies. 4 OECD countries - Luxembourg Netherlands, Ireland & Switzerland aggressively (?) facilitate tax avoidance Need automatic exchange of info End bank secrecy. 11

12 Tax Wars Tax Competition between states is not healthy Early starters in avoidance had a competitive advantage Race towards bottom Tax Wars avoidance industry Average CT rate now 22%, down from 35% in 1995 in EU27 12

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14 The Tax Power Brokers Tax influencers: David vs Goliath Unions & NGOs vs Accountants, Lawyers funded by MNCs Media now partners with KPMG etc on Budget! Professional bodies, ITI, ICAI etc have been captured anti progressive taxes Big Four: 750,000 employees, revenues 117bn, vast profits. 14

15 Reforms Tax & Digital economy complex & difficult Wide agreement on necessity for new rules (IMF) Reform of US Corporate tax system? Bank Secrecy & Automatic Exchange of Information OECD s BEPS 2 year plan, 15 actions to curb MNC s aggressive tax planning 15

16 BEPS Reform is complex & difficult. Surprising progress in 2 years. But MNCs must publish country a/cs with relative & absolute amounts of economic activity & cash tax payts. Degree of dependency of local to group Not burdensome as they already submit country accounts Must be public register of beneficial owners of companies and trusts in EU. 16

17 Reforms EU must agree broad principles Tax Coordination Global formula apportionment sales, employees, assets, etc. Agree Tax Base Residence Exiles and EuroTax tackle avoidance and evasion Mandatory Tax Arbitration between countries as treaties will take 15 yrs 17

18 Recommendations Commission on EU taxation Agree broad principles of taxation EuroTax agency FTT Strengthen BEPS Curb Tax Wars CCCTB Break up Big Four accounting firms 18

19 Recommendations cont MNCs publish full accounts in each country & cash tax paid Eviscerate family and other trusts Rigorous tax investigation in each MS Introduce wealth assessments in each MS as counter evasion/avoidan Wealth Taxes Close tax havens or no trade/flights. 19

20 Conclusion Unequal battle MNCs Global Rich vs NGOs words (harmful taxes, burden) Govts are cash poor. Evasion Avoidance & Havens are key reducing inequality, corruption, developing countries, etc Steps finally being taken (BEPS) etc Not enough publish country a/cs and cash tax paid; Eurotax; cut off all havens. 20