Tuesday, November 17, 2009

Positive mood continues to emerge on tax

From Taxanalysts:

"The French government on November 16 issued draft legislation that would curb tax avoidance by implementing new trust measures and strengthening existing tax laws governing companies operating in uncooperative jurisdictions."

Separately, but in a similar spirit, the United States is considering something interesting, described in the New York Daily news:

"The state Tax Department is considering creating a Most Wanted list to shame tax cheats into paying, the Daily News has learned. Tax officials are looking into posting the top 200 business and top 200 personal tax delinquents online.

"It's a good idea as a tax enforcement device and we are exploring that," tax department spokeswoman Susan Burns said. As of April, there were about 1 million outstanding tax warrants totalling $14.4 billion, officials said."

And in the United Kingdom Dr Brooke Maganti, the sex worker behind the Belle du Jour publishing phenomenon, joins Katie Melua and Graham Norton in a similar spirit:

"She also took the opportunity to clarify her relationship with Her Majesty’s Revenue and Customs department. “So much curiosity about my tax situation!” she wrote. “Yes, I did pay taxes on sex work earnings.”

And in Switzerland, we have this:

"Swiss banks are considering asking some foreign clients to sign a pledge declaring they aren't breaking tax laws at home, a Swiss newspaper reported Sunday."

These are all just anecdotal examples of a mood swing. Yet a few swallows don't make a summer, and the pervasive mistake that is being made is to assume that these constitute a global groundswell that is solving the problem of tax havens, leading to headlines such as Forbes' recent "G20 stamps out tax havens." Nonsense.

The ferocious forces of tax competition are raging as strongly as ever, and the standards endorsed by the G20 and OECD are, as we have noted ad nauseam, woefully inadequate: like putting sticking plasters on a broken limb. The second line of the above Swiss story illustrates the caveats and weaknesses in all this apparent progress: the pledge request proposal is, according to the chairman of the Swiss Bankers Association, Patrick Odier, merely a possible way of forestalling demands for an automatic exchange of client information with other countries. In other words, give the appearance of change, while leaving the

So while we welcome the signs of a definite mood swing -- hardly surprising in the wake of such a severe financial crisis - we don't see signs that the change runs especially deep.


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