If you are interested in assisting reduce or eliminate extreme poverty and you want more than writing a cheque to fix a symptom of a problem then you might find this note interesting. Various groups have highlighted the importance of tax havens in undermining foreign governments in their development work by being a mechanism by which the wealthy can avoid paying taxes. What does government in Canada provide to us? Schools, hospitals, universities, social safety net, police. Imagine what Canada would look like if we had almost no tax revenue. Within a decade or two there would be no schools, hospital, universities, social safety net, police etc.
Tax haven crackdown could deliver $120bn a year to fight poverty
13 March 2009
“Developing countries are losing billions every year that would provide a vital boost to their economies and could be spent on reducing poverty.”
Sebastien Fourmy, Policy and Advocacy Director
Oxfam FranceDeveloping countries miss out on up to $124 billion every year in lost income from offshore assets held in tax havens, international agency Oxfam said today ahead of the G20 Finance Ministers’ meeting on Saturday.
A new analysis conducted for Oxfam by James Henry, former Chief economist at McKinsey & Co, found that at least $6.2 trillion of developing country wealth is held offshore by individuals, depriving developing countries of annual tax receipts of between $64-124bn. If money moved offshore by private companies was included this figure would be much higher.
The scale of the losses could outweigh the $103bn developing countries receive annually in overseas aid. And capital flight is a growing problem with an additional $200-300 billion being moved offshore each year.
Tighter regulation of tax havens will be a key item on the agenda of G20 Finance Ministers meeting ahead of the London Summit on April 2 and is the subject of a public seminar and demonstrations on Jersey today.
Oxfam is calling for reform of tax havens and wider reform of the financial system to reduce volatility, increase accountability and give developing countries a greater say in the management of the global economy. It is also pressing G20 leaders to agree a bailout for poor countries to help them escape the worst affects of the financial crisis.
British Prime Minister Gordon Brown has recently spoken of the need for action on tax havens, which include British territories such as Jersey, Isle of Man and the Cayman Islands, but has not yet come up with any concrete proposals. France and Germany have been leading calls for a crackdown.
Sebastien Fourmy, Policy and Advocacy Director from Oxfam France said: “Developing countries are losing billions of pounds every year that would provide a vital boost to their economies and could be spent on reducing poverty.
“This money could pay for health and education services, for protection against the deepening impact of the economic crisis such as safety nets to help those who have lost jobs and for projects to protect poor people already affected by climate change. $16bn a year would be sufficient to give every child a school place and $50bn a year is needed to help poor countries protect their people from climate change.
“The current financial crisis shows our leaders can no longer afford to stand idly by whilst tax havens take billions of pounds from the pockets of taxpayers in rich and poor countries alike.
”Reform of tax havens would be an easy win for our leaders that would benefit ordinary people at home and abroad alike. There is no longer any excuse for delay.”
Oxfam is calling for new rules requiring tax havens to disclose information on money entering their jurisdiction and for multinational companies to report the taxes they pay in each country in which they operate. This would allow countries to identify individuals and organizations that illegally avoiding tax and take action to recover it.
From the Tax Justice Network website:
TAX HAVENS CAUSE POVERTY
The Tax Justice Network promotes transparency in international finance and opposes secrecy. We support a level playing field on tax and we oppose loopholes and distortions in tax and regulation, and the abuses that flow from them. We promote tax compliance and we oppose tax evasion, tax avoidance, and all the mechanisms that enable owners and controllers of wealth to escape their responsibilities to the societies on which they and their wealth depend. Tax havens lie at the centre of our concerns, and we oppose them.
Take a look at our core themes:
We support sustainable finance for development
We support international co-operation on tax, regulation and crime
We oppose tax havens and offshore finance
We support transparency and we oppose corruption
We support a level playing field in competitive markets
We support progressive and equitable taxation
We support corporate responsibility and accountability
We support tax compliance and a culture of responsbility
These issues affect rich and poor countries, and, like the fight against corruption, our approach does not fit easily into either of the old political categories of left and right. We do not argue generally for high or low taxes (that is for voters to decide) but we note the often better human development outcomes in higher-tax countries and oppose the demonisation of tax that is fashionable in some circles. What we do support is progressive and equitable taxation, which is what voters around the world have chosen. We wish to see nations’ sovereignty restored, so that electorates are given back the power to get the tax systems they vote for. To this end we advocate much stronger co-operation between states on tax and regulation. This will help us address the growing tension between global integration and a shortage of credible international governance.
For more information visit:
Other information that may be of interest:
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.