Tax: the Cinderella issue
One comment John made received especially warm comments from the floor. Tax, he said, is the Cinderella of the world of development and foreign aid: it's been hidden away for so long, ignored by so many for so long, while its two sisters - aid and debt relief - have held centre-stage, leaving tax matters almost entirely in the twilight. Taxation revenues, at the end of the day, are more sustainable, more important, and more supportive of good and accountable government - so we consider it the most effective source of finance for development. Many people in Africa, for example, are beginning to think so too.
More prosaically, we'll outline some of the recommendations that John made at the meeting. We are offering a small section from his presentation:
"Europe both can and should take the international lead in tackling secrecy jurisdictions. The Tax Justice Network suggests the following actions:
- Strengthening and broadening the European Savings Tax Directive and entering into information exchange agreements based upon the principle of automatic exchange with countries outside the Union
- Adopting an international accounting standard for country-by-country reporting by multinational companies
- Supporting proposals to strengthen the UN Tax Committee to help it become the principal forum within which norms for multilateral tax cooperation can be agreed
- Promoting the UN Code of Conduct on International Cooperation in Combating Tax Evasion, to create a benchmark for testing the actions of secrecy jurisdictions and the financial professionals who promote tax evasion services
- Pushing for tax evasion to be treated as a serious crime under the UN Convention Against Corruption, and as a predicate crime under the Anti Money Laundering (AML) regimes of all countries providing financial services to non-resident clients, and requiring the International Monetary Fund (IMF to extend the process of its Reports on the Observance of Standards and Codes to include matters relating to banking secrecy, disclosure of ownership, and ability to comply with requests for information exchange
- Requiring all European secrecy jurisdictions and their dependent territories to:
(i) provide full public disclosure of the beneficial ownership of all legal entities registered under their jurisdiction;
(ii) to abolish banking secrecy arrangements;
(iii) to demonstrate their capability to engage in effective information exchange; and
(iv) to require all professionals covered by AML regulations to automatically submit suspicious activity reports for each and every client who they suspect of tax evasion.