Tax havens drain poor nations, OECD says

We are highlighting here an old story - a Reuters interview with Jeffrey Owens, head of tax at the OECD, entitled "Tax havens drain poor nations, OECD says."

We did highlight it on our website when it first came out last November, but for some reason we realise we didn't highlight it on our blog (we thought we had), and it's an important one, so we'll highlight it here for those who missed it. (It should be read together with another article we did highlight, by the OECD Secretary-General Angel Gurría, on a similar theme. A couple of excerpts from the Owens interview:

"Tax havens have a bigger impact on developing countries than on developed countries . . . There is an enormous drainage of revenues to tax havens. This is equivalent to around 7 to 8 percent of gross domestic product for the African continent and a multiple of the aid it gets from developed countries."

It's worth reading the whole article. This is also an important point:

'He said a parallel push to reduce barriers to trade through the Doha world trade round -- which has no relationship to the weekend U.N. meeting in the Qatari capital -- also stood to deprive poorer countries of key tariff revenues. While cutting import duties is desirable on a global basis, because it would pry open markets to cross-border commerce (TJN here: not everyone would agree with that last part), Owens said the easy-to-collect tariffs now constitute as much as half of many poorer countries' entire tax collection.

"It's far easier to levy a tariff than to collect value added tax. You just need a guy at the border," he said. "But as more and more countries join the World Trade Organisation they join in the commitment to reduce tariffs."'

And finally, we've been blogging recently about Singapore, with a long article and a guest blog. Owens had this to say:

"Other centres, notably Singapore, had made no political commitment of any sort and were benefiting from being outside the reach of a European Union bill for the taxation of interest from non-resident savings Switzerland has signed up to, he said.

All offshore centres are likely to face more pressure from industrialised nations as the growing financial crisis forces governments to seek more sources of cash.

An attempt by the EU to extend its savings directive to non-EU jurisdictions may challenge Singapore, according to Owens. "The political climate is changing and I do not think that Singapore is correctly reading the political signs that a change is about to come," he said."