Wednesday, September 16, 2009

Tackling tax havens is number one priority says Lord Brennan


Faced with massive budget deficits, widening inequality, and widespread public recognition that rich people are not paying their shares of the tax burden, global political leaders must make tackling tax havens the number one priority, warned Lord Brennan at a conference in Washington today.

Giving the key note speech at the annual conference of the Task Force on Financial Integrity and Economic Development, Lord Brennan warned about the erosion of professional integrity within the financial communities. Tax havens, he argued, create the conditions of secrecy which encourage illicit financial flows and criminality. For this reason he urged that policy makers give priority to requiring full disclosure of ultimate beneficial ownership of all legal persons (companies, trusts, foundations and so on), and adoption of a country-by-country reporting standard for corporate subsidiaries.

Other speakers at the conference have also identified tax havens as a number one priority for global action. Panellists discussing tax information exchange standards unanimously called for automatic information exchange as the most effective international standard for deterring tax evasion. Chairing the panel on information exchange, TJN director John Christensen called on the OECD to give priority to finalising the building blocks needed for a global framework for information exchange. These building blocks include agreement on protocols for Taxpayer Information Numbers; the range of information that must be collected by banks for information exchange purposes; and agreement on the technical processes for information exchange.

Tax specialist Martin (Marty) Sullivan lamented the lack of progress made by the OECD in creating the pre-conditions for effective information exchange and raised concerns that the OECD's claims for success in tackling tax havens will make the public lower their guard and stall political pressure for change.

The Task Force on Financial Integrity and Economic Development is the global leader in tackling illicit financial flows and tax havens. Combining a broad coalition of research specialists, non-governmental organisations and government agencies from over 60 countries, the Task Force has just published its recommendations for how G-20 leaders can effectively tackles illicit financial flows.

Also speaking at the conference were the team appointed by the Norwegian government to investigate the impact of tax havens on developing countries. Their damning report provides both an economic and moral imperative for tackling tax havens without delay.

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