Tuesday, May 10, 2016

Enemies Of The People

I hardly think that is too harsh a description of both those who park their money offshore to avoid taxes and those who facilitate such evasions. Indeed, an open letter signed by some of the world's leading economists makes the cost of such selfish and criminal behaviour eminently clear:

As the Panama Papers and other recent exposés have revealed, the secrecy provided by tax havens fuels corruption and undermines countries’ ability to collect their fair share of taxes. While all countries are hit by tax dodging, poor countries are proportionately the biggest losers, missing out on at least $170bn of taxes annually as a result.

... we are agreed 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. By hiding illicit activities and allowing rich individuals and multinational corporations to operate by different rules, they also threaten the rule of law that is a vital ingredient for economic success.

To lift the veil of secrecy surrounding tax havens we need new global agreements on issues such as public country by country reporting, including for tax havens. Governments must also put their own houses in order by ensuring that all the territories, for which they are responsible, make publicly available information about the real “beneficial” owners of company and trusts.

The impact of such behaviour is felt everywhere, but never more than in developing countries:
... while estimates put the cost to Canadian tax coffers at between $6- and $7.8-billion per year, the effects on developing countries is far greater, said Haroon Akram-Lodhi an economist and professor of international development at Trent University.

“The amount of capital flight from sub-Saharan Africa is absolutely huge and it’s all going into these tax havens,” said Akram-Lodhi, one of the signatories of the letter. “This is reducing the ability to fight poverty on a global scale.”

Will governments merely go through the motions of doing something, and then go back to the old ways once the fierce glare of the public subsides? I don't know, but I am somewhat dubious of any substantive changes, since the rich and powerful are, well, rich and powerful.

Now that a searchable database is online, this interview with The Star's Marco Chown Oved sheds some light on what can be found there:

One hopes against hope that real change is in the offing.


  1. And where is the deterrence, Lorne? The Revenue Agency seems to be rigged. When the rich get caught they get what I call "Mulroneyed." They get off by paying the evaded tax, a small amount of interest and ZERO penalty - that's "the Mulroney." When the KPMG/Isle of Man scheme blew up, the tax evading investors got Mulroneyed, the lot of them. Not one dime in penalties was assessed. There was no prosecution of the principals who had conjured up this scheme and sold it to their unscrupulous clients. Then again, those guys were top partners at the same firms that the CRA brass were planning to join after retiring from the civil service. Bent? Do ya think?

    Does the CRA really need sensational press accounts to twig to major tax evaders squirreling their assets offshore? Of course not. All the Panama Papers scandal meant was that they couldn't ignore this particular tip of the evasion iceberg any longer.

    Nations individually but especially collaboratively can tell when money is missing and who is behind it. The OECD can easily recover trillions of dollars this way. So why haven't they? Think that's oversight, a fluke?

    1. I share your deep cynicism about this whole exercise, Mound. My suspicion is that after a few spectacular 'outings', à la Bernie Maddoff, it will be back to business as usual, with the usual suspects enjoying life that the rest of us (Leona Helmsley's "little people") have to pay for through our taxes. As well, of course, were the estimated huge amounts in lost revenues actually recovered, that would put a kink in the neoliberal plan to keep the rest of us a little hungry, a little desperate, and happily accepting of the odd ort the elites toss us. Ain't gonna happen.

  2. One set of the rules for the rich, Lorne. Another set of rules for everyone else.

    1. And I suspect another rule, at least up to now, Owen, is the same as in Fight Club: You do NOT talk about it: https://www.youtube.com/watch?v=dC1yHLp9bWA