IMF, OECD follow TJN in linking tax havens with crisis
This new article (in French, with intelligible but not entirely correct automatic translation here) contains a number of important statements
Dominique Strauss-Kahn, head of the IMF, said this in a radio broadcast on October 13th:
"It is necessary to pursue them to the end and make them disappear - and that is a question of political will."
(Strauss-Kahn is now in real trouble on an unrelated matter.) We agree entirely with what he was quoted as saying on tax havens, but the IMF should have been saying this years ago (we know why: much of the problem can be summed up in one word: lobbyists). But it's really nice to see: and presidents and prime ministers are now saying this kind of thing too.
But it's also essential, in this context, to highlight the words of Pascal Saint-Amans, head of International Co-operation and Tax Competition at the OECD, speaking about tax havens (or secrecy jurisdictions, as we often prefer to call them):
'"They have helped the crisis spread," he said, and they could "amplify it further" if nothing is done. "Many of the toxic products were structured in the Cayman Islands. Tax havens have competed to offer these types of products, through which they have been able to pass quickly from one place to another. Their lack of transparency encourages cascade effects, whose next victims could be the hedge funds," adding that the financial structures which brought Lehman Brothers down were woven together in these centres.'
And then he might as well have been quoting from our article"
"You cannot put together a new financial system and leave the tax havens alone. All the banks have subsidiaries there. How can we allow these establishments, which are backed by public money, to keep making so much money while helping people to defraud the taxpayer?"
That's the spirit! In 1998 the OECD did, to its credit, try to put together an initiative on harmful tax competition (when, we ask, isn't it harmful?) but this initiative was eviscerated after US President George W. Bush took power. Time to re-launch it, guys (and why not perhaps call it something slightly different - recognising that it's not only tax that's under attack here, but related problems of regulation and secrecy too.)
But back to this article. It quotes Michel Roy of the powerful French NGO Sécours Catholique as saying that tax havens are a "time bomb" that must be tackled. It also, of course, quotes TJN, whose director, John Christensen, said:
"The French and the Germans give the impression that they want to reform the financial system. But the British and American administrations are seeking simply to put out fires, instead of changing things."