Thursday, April 29, 2010

Football's FIFA threatens Offshore Alert

The latest newsletter from OffshoreAlert states that:

"The governing body of world soccer – FIFA – has attempted to intimidate OffshoreAlert ahead of our conference in Florida next week at which allegations of fraud and corruption within FIFA will be made.

In a letter to OffshoreAlert on April 23, FIFA's attorney, Lawrence Cartier, of London-based law firm Cartier & Co., issued a thinly-veiled threat of a possible libel action should a session by journalist and film-maker Andrew Jennings contain any "defamatory statements".


We are pleased that Offshore Alert has pledged to "proceed unfettered by outside interference." As they note, quite rightly:

"British libel law is widely considered to be repugnant, particularly in the USA where, in fact, British libel judgments have been held unenforceable in at least two states because they were, literally, considered to be repugnant to each state’s public policy.

"It lends support to illegal activity by discouraging journalists from exposing those who deserve to be exposed, all the while enriching attorneys at the expense of society in general. It is a third-world law that has no place in a developed society."


Britain's libel law is a tool of the City of London to practise censorship to protect unclean financial interests, at the expense of the rest of humanity. As we have already, noted, this sedition law for millionaires costs 140 times more to defend a libel suit in London, compared to the rest of Europe.

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Socialism for the Rich (part two): public subsidies for Jersey bankers

Among the many extraordinary and unjustifiable aspects of the way tax havens function, taxpayer sponsorship of banks in Jersey is particularly hard to understand. Jersey Finance, the marketing arm for the offshore industry, has rejected the concerns of island's Public Accounts Committee, a spending watchdog, that public spending on marketing trips to drum up financial services business in places like the Middle East and Far East Asia is not a good use of taxpayer money.

But why should highly profitable banks be subsidised in this way? If banks and other intermediaries want to have politicians and civil servants tagging along on these marketing missions they should fund the fares, accommodation costs and compensate the public for the publicly funded time involved.

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Tuesday, April 27, 2010

Socialism for the Rich: Battle to keep tax breaks for hedge funds and private equity partners


An important battle for financial stability and tax justice is being fought out in Washington, but don't get your hopes up: while the Obama administration in the White House has committed itself in its 2009 budget to taking action, vested interests in the Senate will almost certainly win.

The issue at stake revolves around a rule in the U.S. tax code that allows private equity and hedge fund partners to classify profits as 'carried interest'. This means that while ordinary people and small business owners are liable to pay federal income tax up to a maximum rate of 35 per cent, plus social security and Medicare payroll taxes, a chosen few are given a special tax treatment which treats trading profits as capital gains, liable for a maximum tax rate of 15 per cent and exempt from payroll taxes.

This astonishing twist in the tax code is at least partly responsible for the proliferation of complex financial instruments over the past 20 years. The IMF has warned about this, but the likelihood of change in Washington - or London - is slim since the political power of the financial lobbies far outweighs any counter-balancing from civil society. According to Gary Weiss, writing in the current issue of Portfolio.Com, past efforts to eliminate the distortion have been stymied, time and again, by Republican Party senators:

"Elimination of carried interest has passed in the House of Representatives three times in recent years, most recently last December, but went nowhere in the Senate. The obstacle to removing this open sore from the tax code is the usual one—partisan politics. When carried interest came up for a vote last December, it was approved on a party-line vote, with nearly every Republican voting against it.
"

The defenders of socialism for the rich include the U.S. Private Equity Council, an industry lobby, which defends the principle of 'carried interest' on the grounds that private equity partners earn their profits through buying capital assets, increasing their value, and selling the asset at a higher price. Of course, this is often achieved through short-term measures like laying-off staff, or adopting aggressive tax positions, rather then through genuine innovation or quality improvement. Furthermore, in many cases the private equity investors and hedge fund managers are using borrowed money to achieve their goals, taking hefty management fees (up to 20 per cent of profits) which are taxed as capital gains.

In economic terms this is a nonsense. In its report on how tax policy has contributed to the financial crisis, the IMF warned: "Tax distortions are likely to have encouraged excessive leveraging and other financial market problems evident in the crisis. These effects have been little explored, but are potentially macro-relevant." That ugly term, macro-relevant, is IMF-speak for likely to impact the economy as a whole.

The problem is that no-one seems to be picking up on this warning. Research is urgently needed, but meantime measures are required to stop further damage arising from these distortions. For starters, capital gains should be taxed at the same rate as income, to avoid temptations to dress one up as the other. And the special treatment of private equity and hedge fund 'carried interest' (undoubtedly a market distortion) should be abolished.

This mess should be sorted out without delay.

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Monday, April 26, 2010

Paradise Lost: Protests in Jersey, shootings in Cayman

Tax havens like to portray themselves as successful examples of the low-tax dream. But low taxes carry a cost, and the cost is typically borne by public sector workers, pensioners, single parents and unemployed people. Nowhere are these pressures greater than in places like Jersey, which boasts a national income per person amongst the highest in the world, but has one of the worst pension schemes in Europe for its elderly people, and is now proposing cutbacks in education. Thankfully teachers and other education workers are prepared to resist these cuts (photo credit to the Jersey Evening Post)

Jersey, a British Crown Dependency, has based its development model on a tax war with the rest of the world, using beggar-my-neighbour tax policies to attract tax avoiding business and rich tax dodgers to its shores. But this is an easy game for others to play, and Jersey is now locked into a vicious cycle of providing tax incentives to big business and public expenditure cuts. Public sector workers are expected to bear the brunt of these cuts, which will further diminish the island's already weak social capital.

Meanwhile, the situation in Cayman, an even smaller community with an even more aggressive position on tax, has deteriorated dramatically in recent years, serving as a dire warning to other small island communities. Captured by right-wing libertarian extremists from the US and UK, Cayman has no income or property tax. The island's government is head over heels in debt, but nonetheless refuses to abide with U.K. government requests to adopt a more sustainable tax regime. Public services are under-funded and inequality has reached extreme levels.

The result is an astonishing mess. With a population of around 55,000 people - many of them immigrants to meet the labour demands of the offshore financial sector - Cayman is facing social breakdown comparable to the worst inner city areas of mainland America: kidnappings, armed robberies, drive-by shootings and murder. Criminal gangs engaged in drug-running have taken root among the island's unemployed and low paid, and the already large local police force is unable to cope. U.K. reinforcements have been drafted in to provide support services.

Add the sad story of corruption in the Turks & Caicos, and Stanford's Bank scandal in Antigua, and you can see why we take such a critical stance of development models based on tax havenry.

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Ayn Rand and the orcs

There's an interesting article from Satyajit Das, a risk consultant, about the libertarian writer Ayn Rand, whose book Atlas Shrugged is extremely popular in offshore-land. Das' article is a fun and irreverent piece. Two comments underneath it are also worth pointing out. The first is this comedy sketch from the Colbert Report.

The second, following our wizard-filled Harry Potter blog, is this:

"There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs."

Just a bit of fun. But the points are serious enough.

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Sunday, April 25, 2010

Tax Havens: Feeble excuses from UBS client

Criminals provide all manner of reasons for their behaviour, and tax evaders are amongst the most deluded in this respect. The latest feeble excuse comes from American watchmaker and retailer, Jack Barouh, who concocted a plan with account managers from Swiss bank UBS to salt millions from his watch business into Switzerland and Hong Kong, routing the funds via a string of sham companies in British Virgin Islands, Panama and Hong Kong.

Barouh (65), who did a plea bargain with the court, requested leniency on the grounds that his parents, both Jewish, brought him up in a culture of "hide and hoard". As a result of this upbringing, according to his lawyers, Barouh came "to compulsively and almost obsessively, want to establish a secret nest egg". The special pleading seems to have helped since the 10-month prison term imposed by the Miami court was half the usual length for similar cases.

Needless to say, real victims of repression had little time for Barouh's feeble excuse.
"Holocaust survivors and their families reject the demeaning assertion that 'survival behavior' learned from the Holocaust could justify illegal evasion of taxes," said one organisation representing U.S. survivors of the holocaust.

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Martin Wolf and the financial doomsday machine

In his latest Financial Times column, Martin Wolf asks a starkly fundamental question: can we afford the financial system in its current state? Unsurprisingly, his answer is no. Especially for countries with ageing populations and under-funded pension schemes, the impact of another financial crisis along the lines of 2007/08 crash would be unimaginable. As Wolf notes in respect of the current crisis, while asset prices in the private sector have bounced back in response to fiscal stimuli, the real losers have been the public, who will have to carry the burden of increased public debt:

"If only a quarter of the world’s loss of output during the recession were to prove permanent, the present value of these losses could be as much as 90 per cent of annual world product.
"

Where did things start to go wrong? While others still hark back to failing sub-prime mortgage markets in the United States and elsewhere, Wolf takes the longer view. Referring to a fascinating speech by the Bank of England's Andrew Haldane, he notes that since 1986 - the epoch of London's Big Bang and the return of laissez-faire financial capitalism - leveraged debt has been the driver of banking profits, and banks have become wildly more profitable and more risky. The U.K. provides an extreme example:

"The UK case is dramatic, with banking assets jumping from 50 per cent of GDP to more than 550 per cent over the past four decades. Capital ratios have fallen sharply, while returns on equity have become higher and more volatile."

And this is where things have gone off the rails, since the bankers can take on foolish risks secure in the knowledge that as their industry becomes more concentrated into fewer and larger players, the potentially devastating impact of a major failure, which would inevitably spill out in the wider economy, forces the hands of governments. Banks and state have become locked together in a mutually destructive embrace, made worse by the fact that limited liability status protects bank's owners from the consequences of actions taken on their behalf by bank executives who pull the political strings in the first place:

"The combination of state insurance (which protects creditors) with limited liability (which protects shareholders) creates a financial doomsday machine. What happens is best thought of as “rational carelessness”. Its most dangerous effect comes via the extremes of the credit cycle. Most perilous of all is the compulsion upon the authorities to blow another set of credit bubbles, to forestall the devastating impact of the implosion of the last ones. In the end, what happens to finance is not what matters most but what finance does to the wider economy."

But one aspect of the doomsday machine is missing from Wolf's account (though it may be covered in the second part of his article next week): what role has offshore played in this process? Well several actually. First, huge sums of hot money have accumulated offshore, in deposit accounts, hedge funds, private equity funds, providing the liquidity on which so much of the leverage finance is based. These sums go largely untaxed and unregulated. Judging from the paucity of official statistics in this area, the volume of these funds is probably underestimated to a significant degree.

Second, offshore activities have contributed enormously to financial market opacity. It is no coincidence that collateralised debt obligations (the securitised instruments at the heart of the mortgage crisis) were invariably issued and traded through offshore financial centres like Cayman, Jersey, Delaware and London. Securitisation encouraged the banks to leverage up since they (wrongly) thought that risk had been more evenly distributed. This proved to be an illusion, and the other so-called benefits of securitisation, such as claims that it would make home-ownership more affordable, have also proved something of a chimera.

Third, banks are by far the largest players in the offshore markets and they are well-placed to maximise the opportunities available for regulatory arbitrage and tax avoidance: it is no coincidence that most if not all shadow banking structures (typically structured investment vehicles) are registered in secrecy jurisdictions. What this means is that for decades banks have been "optimising" their tax bills while maxing on their risks in the expectation that taxpayers will bail them out when the inevitable happens.

Meantime the infernal machine creates an unsustainable and grotesquely inequitable economy in which wealth and income has become concentrated in the hands of a tiny minority of politically well-connected speculators. Britain's HM Revenue and Customs, for example, has revealed that in 2008 less than two percent of London's working population pocketed over a quarter of the total income paid out in the capital that year. With no evidence of the trickle-down effect so favoured by delusional orthodox economists, and equally no sign that the tax system will remedy this economic perversity. As Wolf comments:

"A large part of the activity of the financial sector seems to be a machine to transfer income and wealth from outsiders to insiders, while increasing the fragility of the economy as a whole. Given the extent of the government-induced distortions in the system, even the fiercest free marketeer should accept this."

Where do the solutions lie? Should governments push for piecemeal reform, as is currently the case, or are more radical steps required? Wolf will be answering this question in his column next week, and TJN hopes that his analysis takes account of how captured states on small island tax havens have driven the race to the bottom in both tax and regulatory degradation, and the part that banks have played in driving this process.

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Friday, April 23, 2010

Dummy Corporations Could Derail US Campaign Finance Transparency

A useful story on this subject on the task force blog.

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Harry Potter and the Wizard of Belize

From our quotations page:

"We feel that this (lack of provision of an effective regulatory system) might be a grave omission, since it is notorious that this particular territory, in common with Bermuda, attracts all sorts of financial wizards, some of whose activities we can well believe should be controlled in the public interest”
- Extract from a memorandum concerning the Bahamas dated 3rd November 1961 submitted by Mr W.G.Hulland of the Colonial Office to Mr B.E.Bennett at the Bank of England. (From the Bank of England archive.)

On the subject of wizards, there is a really superb long article in the Times newspaper called The single mother's manifesto, by the author J.K. Rowling, author of the Harry Potter chronicles. It follows a debate yesterday by three British Prime Ministerial candidates for the forthcoming general election, and a comment by David Cameron, leader of the Conservative Party, promising a hundred and fifty pounds a year more for single mothers, and his comment "it’s not the money, it’s the message”.

Here are a couple of snippets that give a flavour of where Rowling is coming from:

"I had become a single mother when my first marriage split up in 1993. In one devastating stroke, I became a hate figure to a certain section of the press, and a bogeyman to the Tory Government.
. . .
Nobody who has ever experienced the reality of poverty could say “it’s not the money, it’s the message”. When your flat has been broken into, and you cannot afford a locksmith, it is the money. When you are two pence short of a tin of baked beans, and your child is hungry, it is the money. When you find yourself contemplating shoplifting to get nappies, it is the money. If Mr Cameron’s only practical advice to women living in poverty, the sole carers of their children, is “get married, and we’ll give you £150”, he reveals himself to be completely ignorant of their true situation."


But here is where she cuts to the issue of tax justice.

"I never, ever, expected to find myself in a position where I could understand, from personal experience, the choices and temptations open to a man as rich as Lord Ashcroft. The fact remains that the first time I ever met my recently retired accountant, he put it to me point-blank: would I organise my money around my life, or my life around my money? If the latter, it was time to relocate to Ireland, Monaco, or possibly Belize.

I chose to remain a domiciled taxpayer for a couple of reasons. The main one was that I wanted my children to grow up where I grew up, to have proper roots in a culture as old and magnificent as Britain’s; to be citizens, with everything that implies, of a real country, not free-floating ex-pats, living in the limbo of some tax haven and associating only with the children of similarly greedy tax exiles.

A second reason, however, was that I am indebted to the British welfare state; the very one that Mr Cameron would like to replace with charity handouts. When my life hit rock bottom, that safety net, threadbare though it had become under John Major’s Government, was there to break the fall. I cannot help feeling, therefore, that it would have been contemptible to scarper for the West Indies at the first sniff of a seven-figure royalty cheque. This, if you like, is my notion of patriotism. On the available evidence, I suspect that it is Lord Ashcroft’s idea of being a mug.


Child poverty remains a shameful problem in this country, but it will never be solved by throwing millions of pounds of tax breaks at couples who have no children at all. David Cameron tells us that the Conservatives have changed, that they are no longer the “nasty party”, that he wants the UK to be “one of the most family-friendly nations in Europe”, but I, for one, am not buying it. He has repackaged a policy that made desperate lives worse when his party was last in power, and is trying to sell it as something new. I’ve never voted Tory before ... and they keep on reminding me why."

We can only take our hat off to J.K. Rowling for these words. We already like the stand taken by other celebrities such as Katie Melua and Graham Norton, in contrast to other supposed saints like Bono and Bob Geldof.

We have already seen wealthy Germans getting together to seek higher taxes on wealthy people. Perhaps it's an idea that could catch on elsewhere.

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World Bank opens up development data

From the World Bank:

April 20, 2010—The World Bank Group said today it will offer free access to more than 2,000 financial, business, health, economic and human development statistics that had mostly been available only to paying subscribers.

The decision─part of a larger effort to increase access to information at the World Bank─means that researchers, journalists, nongovernmental organizations (NGOs), entrepreneurs and school children alike will be able to tap into the World Bank's databases via a new website, data.worldbank.org.

Experts say the Bank's open data initiative has the potential to stimulate more evidence-based policymaking in developing countries by bringing more researchers and innovative analysis into the development process. The move is also likely to stimulate demand for data and increase countries' capacity to produce it, they say.

And, for the first time, data will be available in languages other than English, with an initial 330 indicators translated into French, Spanish and Arabic.

“It’s important to make the data and knowledge of the World Bank available to everyone," World Bank President Robert B. Zoellick said. "Statistics tell the story of people in developing and emerging countries and can play an important part in helping to overcome poverty.”

There is even tax data - long a major gap in the research. It's still pretty rudimentary, but can be found here.

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Havens are a hacker's heaven

Are offshore banks vulnerable to hackers and, if so, should their clients be worried? Yes and yes, according to Andrew Hay, a security professional who has worked in secrecy jurisdictions and now claims that offshore banks don't provide their clients with anything like the level of security that they might be expecting.

In an article in Technology Review, Hay is cited raising concerns about a range of security issues, including out-of-date firewall systems, expired system support contracts, out-of-date hardware, shortage of local expertise and barriers to expatriate experts, as reasons why some bank branches on small island secrecy jurisdictions lag on client security. And the hackers are well aware of these deficiencies:

"Hay said that these banks are also being targeted by a wide variety of common attacks, including phishing and website defacement. In some cases, they're also vulnerable to older attacks that wouldn't work on up-to-date infrastructure."

Based on Hay's conclusions, Technology Review reckons that while "There hasn't yet been a high-profile data breach to get the attention of offshore banks . . . it's only a matter of time."

Far be it for us to draw attention to the security deficiencies of offshore banks, but considering the fees they charge, which are way North of exorbitant, the least they should do is maintain the defences.



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G-20: join the dots between illicit financial flows, tax havens and poverty

Washington-based Global Financial Integrity has issued the following release ahead of today's G-20 Finance Ministers meeting in Washington:

G20 Ministers Should Connect Link Between Illicit Financial Flows, Tax Havens, Poverty

WASHINGTON, DC - As the Group of Twenty (G20) finance ministers meets in Washington, Global Financial Integrity (GFI) urges leaders to acknowledge the devastating link between illicit financial flows from developing countries, secrecy jurisdictions (tax havens), and global poverty.

"Every year the developing world loses as much as $1 trillion to secrecy jurisdictions via government corruption, criminal activity, and commercial tax evasion," said GFI director Raymond Baker. "This overwhelms official development assistance by a magnitude of 10; curtailing these flows is critical to alleviating global poverty and enabling economic development."

Therefore, GFI asks the G20 ministers to adopt the following language in any official communiqué resulting from the summit:

"We recognize the link between illicit outflows of capital from developing countries, absorption of those resources by tax havens and secrecy jurisdictions, and the adverse impact those flows have on poverty alleviation and economic development.

We welcome work by the FATF to help detect and deter the proceeds of corruption by prioritizing efforts to strengthen standards on customer due diligence, beneficial ownership and transparency. To build on those advances we call on the FATF to further its work by recommending that the beneficial ownership of all companies, trusts and foundations be made a matter of public record. We also ask the FATF to amend recommendation number 1 to list tax evasion as a predicate crime for a money laundering charge."

GFI is spearheading an effort asking the G20 to demand financial transparency; its recently-launched G20 Transparency campaign enables people around the world to demand action from the G20 on illicit financial flows. The campaign invites people to sign-on in favor of greater transparency and accountability in the global financial system.


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Thursday, April 22, 2010

Mayor Bloomberg's offshore millions

It's the New York City Mayor this time: Mayor Michael Bloomberg. Take a look at this excellent story by the New York Observer. The whole article is worth reading; we offer just a few highlights here.

"I’ve said this before, but the first rule of taxation is, you can’t tax too much those that can move,” Mr. Bloomberg intoned on a radio show late in the crisis. “You know, we’re yelling and screaming about the rich. We want the rich from around this county to move here. We love the rich people.”

And yet the richest New Yorker of them all—Mr. Bloomberg himself—had been ignoring his own advice."


What is the issue?

"By the end of 2008, the Bloomberg Family Foundation had transferred almost $300 million into various offshore destinations—some of them notorious tax-dodge hideouts. The Caymans and Cyprus. Bermuda and Brazil. Even Mauritius, a speck of an island in the Indian Ocean, off the coast of Madagascar. Other investments were spread around disparate locations, from Japan to Luxembourg to Romania."

Romania isn't on our list of secrecy jurisdictions, but the others all are. Cyprus, a particularly mucky bolt-hole (well, it's more of a conduit) for looted Russian billions; the Cayman Islands, one of the epicentres of the global economic crisis (or should we say the global economic fraud?) and Luxembourg, apparently the very special friend of North Korea's Kim Jong-Il.

This is a little reminiscent of (but far, far muckier-looking than) the recently publicised activities of a former British Prime Minister (who, it also has to be said, wasn't the first.)

Bloomberg's offshore games have attracted an interesting cast of characters, as the NY Observer notes:

"Several weeks ago, the foundation named a new 19-person board that reads like a who’s who of national politics and finance: Former Florida governor Jeb Bush, former Georgia senator Sam Nunn and former Treasury secretary Hank Paulson are among the members."

And now we have the former Manhattan crime-fighter in chief, Robert Morgenthau (who just joined our friends at GFI) revealing a related problem:

"Mr. Morgenthau said he’d spoken generally about offshore loopholes to four U.S. secretaries of the Treasury, twice to the commissioner of the general revenue and, as it happens, to Mr. Bloomberg himself. The mayor seemed uninterested in the offshore issue, he said. “I’ve talked to the mayor about it, and the budget director,” Mr. Morgenthau said. “We did get help from the State Division of Taxation and Finance. But nothing from the city.”

This is one of the most difficult problems with the offshore system. It is used most extensively by the world's wealthiest and most powerful (not to mention big media corporations which use and laud it) - making this an especially tricky issue to tackle.

A last word to someone in the non-governmental sector.

“I’ve never seen anything like it. It’s about as opaque set of investments as you can find,” said Rick Cohen, who covers foundations and charities for Nonprofit Quarterly, and who agreed to review the foundation’s tax return. “This involves extensive investments in hedge funds offshore, where the motivation and purpose is not discernible, so you can’t tell what kind of activity it is or who is going to benefit from the investments.”

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Europe wakes up to the power of tax against poverty

From Christian Aid:

"Developing countries' urgent need to boost their tax revenues in order to fund schools, hospitals and the fight against poverty won welcome backing today from Europe, says Christian Aid.

'We're delighted to see that the European Commission has really woken up to the power of tax,' said Dr David McNair, Christian Aid's Senior Adviser, Economic Justice. 'It is highly significant that it has explicitly recognised poor countries' need for higher tax revenues in order to achieve Millennium Development Goals such as halving extreme poverty and hunger and reducing child mortality.

'The Commission has also made the crucial link between countries having successful, fair tax systems and the strength of their democracy and efforts against corruption.'

The Commission's latest stance on tax and poverty emerged today in its new Communication on tax and development, which will be the basis of European Union governments' contribution to the United Nations major review, in September, of global progress towards the Millennium Development Goals. The Communication states that in future, the EU's aid commitments will also include agreements on raising tax revenue more effectively in developing countries.

Christian Aid also warmly welcomes the Commission's acknowledgement of the importance of a new accounting standard requiring multinational companies to reveal the taxes they pay and the profits they make in every country where they operate. The standard, known as country-by-country reporting, would dramatically boost poor countries' efforts against tax dodging by multinationals.

Developing countries' tax loses, which are estimated to be in excess of $160bn a year, hit public services and the people living in poverty who depend on them.

The Commission's support for Organisation for Economic Cooperation and Development work to include country-by-country reporting in its Guidelines for Multinational Enterprises increases the pressure on the OECD to deliver such a standard. However, while Christian Aid welcomes such a voluntary standard, a mandatory one is required to make real progress.

The Communication also supports the International Accounting Standards Board's (IASB) work on a binding international country-by-country reporting standard. This increases the pressure on the IASB, which has been desperately slow at producing such a standard.

Finally, the Communication implicitly recognises that the G20's current crackdown on tax haven secrecy needs to go further in order to benefit developing countries. We now have explicit statements from both the OECD and European Commission that the interntional community should explore Automatic Exchange of Tax Information to help developing countries challenge tax dodgers.

ends


For the EC communication on tax and development, click here.
For the EC working staff document on tax and development, click here.

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National Geographic: Guarded Treasures

National Geographic magazine has picked up on our Financial Secrecy Index and published a fascinating graphical representation of the top 15 secrecy jurisdictions according to opacity and scale of operation.

The horizontal axis on the chart below shows scale of operation. The vertical axis represents opacity. As you can see, the United States tops the index by virtue of the scale of its offshore financial services activity and the opacity of laws at federal and state level (Delaware was cited in the 2009 index as an example of state level opacity).


Luxembourg comes second due to the sheer scale of its offshore activities, even though Switzerland (ranked third on the index) is more opaque.

Interestingly, the City of London, which has the largest offshore financial sector in the world, ranks fifth because it is comparatively transparent when set alongside the other main players. That does not let London off the hook, however, since if you look closely at the top fifteen shown on the chart below you will note that half have historic links to the British Empire (Bermuda, Cayman Islands, Guernsey, Hong Kong, Ireland, Jersey, Singapore). In practice, City firms are happy to shunt their really dirty stuff offshore to the Crown Dependencies and Overseas Territories where they can more easily bypass political and regulatory processes.

As the National Geographic article notes: "some free marketeers say havens improve banking competition and economic growth. Yet the U.S. Treasury loses an estimated $100 billion a year to them." And, citing TJN's John Christensen, they point out that the biggest losers are the poor: "A 2009 study found that developing countries forfeit up to a trillion dollars a year" due to the activities of secrecy jurisdictions.

This is a fascinating insight into the emerging new geography of corruption.

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London G-20 Summit: a progress report one year after the event


Our colleagues at CCFD-Terre Solidaire in France have prepared a progress report (in French) on what has changed since the G-20 Summit in London last year. Sadly, it does not make for happy reading.

The report addresses 12 questions, as follows:

1. Have we seen the end of tax havens?
2. What purpose have the OECD black and grey lists served?

3. Are tax authorities able to tackle evaders more easily?

4. Is G-20 capable of publishing a full and proper list of tax havens?
5. What have been major success stories for tax authorities since the summit?

6. Are the tax havens frightened about their future prospects?

7. What has changed for the banks?

8. What has changed for multinational companies?

9. What has changed for organised crime and corruption?

10. What has changed for developing countries?

11. Has civil society mobilisation served any purpose?

12. Can we expect anything from the G-20 process?

Good questions, and we recommend you sharpen up your French vocabulary, read the full report, and get angry at the pathetic lack of progress made since last April.

And don't forget to note in your diary that French President Nicolas Sarkozy has the Presidency of G-20 in 2011, and he has already signalled that tax havens will be the principal theme. The G-20 2011 Summit will be held in lovely Cannes, on the French Riviera. We'll be there.

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2011 Tax Justice Council to be held in Dakar, Senegal

The global Board of Directors of Tax Justice Network has agreed that the next Tax Justice Council Meeting will be held in January 2011 in Dakar, Senegal. The dates will coincide with the 2011 World Social Forum, which is being hosted by Senegal.

The Tax Justice Council meets every two years. It is the highest decision-making body of the Tax Justice Network, which amongst other responsibilities is the body that elects the global Board and determines the over-arching international priorities for the following years. The powers and responsibilities of the Council are stated in our Constitution (see article 7).

Tax Justice Council Meetings are open to TJN Members and Supporters. TJN will also use the opportunity of the World Social Forum to organise seminars and workshops which will be open to all-comers.

The Minutes of the last Council Meeting, held in Belém, Brazil, in January 2009, are here.

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Wednesday, April 21, 2010

Break up the big banks

In case anyone needs a (US-centred) list of influential people who support breaking up the big banks, here is one.

Nobel prize-winning economist, Joseph Stiglitz
Nobel prize-winning economist, Ed Prescott
Former chairman of the Federal Reserve, Alan Greenspan
Former chairman of the Federal Reserve, Paul Volcker
Former Secretary of Labor Robert Reich
Dean and professor of finance and economics at Columbia Business School, and chairman of the Council of Economic Advisers under President George W. Bush, R. Glenn Hubbard
Simon Johnson (and see this)
President of the Federal Reserve Bank of Kansas City, Thomas Hoenig (and see this)
President of the Federal Reserve Bank of Dallas, Richard Fisher (and see this)
President of the Federal Reserve Bank of St. Louis, Thomas Bullard
Deputy Treasury Secretary, Neal S. Wolin
The President of the Independent Community Bankers of America, a Washington-based trade group with about 5,000 members, Camden R. Fine
The Congressional panel overseeing the bailout (and see this)
The head of the FDIC, Sheila Bair
The head of the Bank of England, Mervyn King
The leading monetary economist and co-author with Milton Friedman of the leading treatise on the Great Depression, Anna Schwartz
Economics professor and senior regulator during the S & L crisis, William K. Black
Economics professor, Nouriel Roubini
Economist, Marc Faber
Professor of entrepreneurship and finance at the Chicago Booth School of Business, Luigi Zingales
Economics professor, Thomas F. Cooley
Economist Dean Baker
Economist Arnold Kling
Former investment banker, Philip Augar
Chairman of the Commons Treasury, John McFall
Paul Krugman
The Bank for International Settlements
Stanley Fischer

As Krugman noted:

"I’d love to see those financial giants broken up, if only for political reasons: it’s bad to have banks so big they can often write laws."

This is a tax justice issue, in the sense that everything is a tax justice issue these days.

There are plenty of technical arguments for breaking up the big banks, but

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Former Malaysian PM identifies role of tax havens in financial crisis

Former Malaysian Prime Minister, Dr Mahathir Mohamad, who, for all his faults, is widely credited with directing Malaysia's modernisation programme from 1981 to 2003, has published an analysis of the financial crisis in which he examines how laissez-faire economics degraded financial market prudence and created markets for financial products that served no useful purpose. And he also notes how lax regulation in offshore tax havens contributed to causing the crisis:

46. The investments by the hedge funds and their leveraging (borrowings) are mysterious. It seems that they need not report to the Government on their activities. Besides, by operating from offshore tax-free havens, they needed to submit reports to no one. Investors in hedge funds were thus able to make huge profits.


Famously, during the late-1990s South East Asian financial crisis Dr Mahathir chose to ignore the IMF's policy prescriptions for Thailand, Indonesia and other neighbouring countries and, heretically, imposed capital controls to protect the Ringitt. Subsequent events proved that the disasters that the mainstream economists predicted did not materialise. As Paul Krugman put it:

"When the controls were put on, many Western analysts predicted disaster: a collapse of the economy, hyperinflation, rampant black markets. It didn't happen."

Mahatir is correct in pin-pointing how tax havens act as the Achilles' heel of globalised financial markets. And his concluding remarks provide very little comfort for western politicians and the cheerleaders of laissez-faire economics:

64. Attempts by the Governments to bail out the financial institutions and companies have not really succeeded. If the economy was doing well then the banks and companies bailed out by the Government would be able to make some recovery. But it would take time because they would have to do prudent business and such business would be slow in giving a return. They can only recover quickly if they were allowed the abuses they had indulged in before. But obviously they shouldn't although there are some who believe they should be allowed to. As for the companies, the general contraction of the purchasing power of the people must reduce sales of their products and therefore their profits. Even if they recover they would not be as financially healthy as before.

65. The recent talk of recovery is therefore not based on reality. Actually it is to justify not doing anything with systems which in the past had been so lucrative. It would take another worldwide crisis before the west would consider dismantling their banking, monetary and financial systems.

66. The leaders of the West are still in a state of denial. What is more likely is that they are aware of how the financial market operations have brought about the crisis but are unwilling to do away with them because they have made so many of their investors rich and have contributed much to per capita and GDP growth in their countries.

67. And so we may see the crisis continue, albeit de-emphasised so as to sustain the financial market.

68. The real solution would be a return to real business i.e. the production of goods and services. But then the developed countries of the West would have to accept being somewhat poorer than the good old days.

The full article is here. To the IMF's credit - albeit decades too late for many countries - it has now, timidly, endorsed capital controls. Once the obvious becomes blindingly obvious, even the blind start to see. Occasionally.

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Robert Morgenthau Joins GFI Advisory Board

Former Manhattan District Attorney Robert Morgenthau has joined the advisory board of Global Financial Integrity. Morgenthau (pictured, on the left, with GFI's Raymond Baker) is the man who -- building on a relationship with TJN's Jack Blum -- fought against major political resistance in the U.S. and the U.K. to bring down the offshore criminal enterprise that was Bank of Credit and Commerce International (BCCI.)

We are delighted that Mr Morgenthau has joined this awesome project.

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Tuesday, April 20, 2010

Goldman's earlier questionable offshore deals

Following our story on Goldman Sachs' involvement in the Cayman Islands and Delaware for its allegedly fraudulent Abacus 2007 dealings (Goldman has denied fraud), we notice this from Offshore Alert:

"OffshoreAlert began exposing Stirling Cooke Brown Holdings in November, 1997 – the same month that the broker was taken public by Goldman Sachs at $22.50 per share in a $50 million IPO, after which Goldman continued to control 23% of the broker's shares through various onshore and offshore investment funds and had two seats on Stirling Cooke's small Board of Directors."

OffshoreAlert continued to expose Stirling Cooke relentlessly until the broker filed for bankruptcy in December, 2003 under the weight of numerous arbitrations and litigation in which several reinsurance contracts brokered by the firm were voided due to fraud. Its share price plummeted to zero – an outcome that was inevitable the day the shares were first publicly-listed.

"If OffshoreAlert could find out all of this negative information, it defied belief that a company the size of Goldman Sachs, with all of its resources, couldn't," says David Marchant, publisher of OffshoreAlert."


Offshore: a wonderland for questionable activity.

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IMF - an interim report to G-20

A draft of the interim report by the International Monetary Fund to the G-20 countries is now available on the BBC website. We have copied the full text of the executive summary below, but draw your attention to two particular themes of close interest to TJN.

First, the report draws attention to the economic distortions arising from the special tax treatment given to loan capital. The tax deductibility of interest payments encourages heavy reliance on loan capital in preference to equity capital. To all intents and purposes this creates a situation in which tax payers are subsidising corporate investment. A previous report on this subject - Debt Bias and Other Distortions: Crisis-Related Issues in Tax Policy - raised the same issue in June 2009, suggesting that the solution might be to cut taxes on equity capital. The current report takes the same route:

Actions are also needed to reduce current tax distortions that run counter to regulatory and stability objectives. The pervasive tax bias in favor of debt finance (through the deductibility of interest but not the return to equity under most tax regimes) could be addressed by a range of reforms, as some countries already have done. Aggressive tax planning in the financial sector could be addressed more firmly.

We also share the concern about the economic bias arising from the different treatment of the two forms of capital, but the solution lies with removing the favourable treatment given to loan capital. Why should capitalist risk-taking be subsidised in this way, especially when it encourages aggressive tax avoidance? And the end-note reference to tackling tax avoidance needs amplification: too much effort is expended on this wasteful and harmful activity.

In addition to the much-flagged proposal for a Financial Stability Contribution, which will be evolved into a risk-based levy on transactions to provide contingency funding in the likely event of future financial crisis, the IMF report also proposes a new tax - a Financial Activities Tax - that will be levied on profits and remuneration:

Any further contribution from the financial sector that is desired should be raised by a “Financial Activities Tax” (FAT) levied on the sum of the profits and remuneration of financial institutions, and paid to general revenue.


We are strongly in favour of taxing banks. Too much of their profitability is based on what Britain's Lord Turner has described as "socially useless" activity. We'd go further: too many banks have turned tax evasion into a global profit centre. New mechanisms for taxing banks are entirely welcome.

The text of the IMF executive summary is given below. The full report is here.


A FAIR AND SUBSTANTIAL CONTRIBUTION BY THE FINANCIAL SECTOR

INTERIM REPORT FOR THE G-20


Prepared by the Staff of the International Monetary Fund


EXECUTIVE SUMMARY


This is an interim response to the request of the G-20 leaders for the IMF to: “...prepare a report for our next meeting [June 2010] with regard to the range of options countries have adopted or are considering as to how the financial sector could make a fair and substantial contribution toward paying for any burden associated with government interventions to repair the banking system.”

While the net fiscal cost of government interventions in support of the financial system may prove relatively modest, this greatly understates the fiscal exposures during the crisis. Net of amounts recovered so far, the fiscal cost of direct support has averaged 2.7 percent of GDP for advanced G-20 countries. In those most affected, however, unrecovered costs are on the order of 4–5 percent of GDP. Amounts pledged, including guarantees and other contingent liabilities, averaged 25 percent of GDP during the crisis.

Furthermore, reflecting to a large extent the effect of the crisis, government debt in advanced G-20 countries is projected to rise by almost 40 percentage points of GDP during 2008–2015.

Many proposals have been put forward to recover the cost of direct fiscal support—some of which have been implemented. Proposals for the government to recover these costs include levies related to selected financial sector claims and taxes on bonuses and specific financial transactions. The least distortionary way to recover the fiscal costs of direct support would be by a ‘backward-looking’ charge, such as one based on historical balance sheet variables. This would define a fixed monetary amount that each institution would owe, to be paid over some specified period and subject to rules limiting the impact on net earnings.

The focus of countries’ attention is now shifting to measures to reduce and address the fiscal costs of future financial failures, both through regulatory changes and through imposing levies and taxes on financial institutions. Measures related to levies and taxes should: ensure that the financial sector meets the direct fiscal cost of any future support; make failures less likely and less damaging, most importantly by facilitating an effective resolution scheme; address any existing tax distortions at odds with financial stability concerns; be easy to implement, including in the degree of international coordination required; and, to the extent desired, require an additional fiscal contribution from the financial sector in recognition of the fact that the costs to countries of crises exceed the fiscal cost of direct support. A package of measures may be needed to attain these objectives.

Measures that impose new costs on financial institutions will need to reflect and be coordinated with regulatory changes under consideration. This is critical for ensuring policy coherence, enabling market participants to plan accordingly, and avoiding adverse effects on economic growth from placing an excessive burden on the financial sector.

After analyzing various options, this interim report proposes two forms of contribution from the financial sector, serving distinct purposes:

- A “Financial Stability Contribution” (FSC) linked to a credible and effective resolution mechanism. The main component of the FSC would be a levy to pay for the fiscal cost of any future government support to the sector. This component could either accumulate in a fund to facilitate the resolution of weak institutions or be paid into general revenue. The FSC would be paid by all financial institutions, with the levy rate initially flat, but refined over time to reflect institutions’ riskiness and contributions to systemic risk—such as those related to size, interconnectedness and substitutability—and variations in overall risk over time.

- Any further contribution from the financial sector that is desired should be raised by a “Financial Activities Tax” (FAT) levied on the sum of the profits and remuneration of financial institutions, and paid to general revenue.

International cooperation would be beneficial, particularly in the context of crossborder financial institutions. Countries’ experiences in the recent crisis differ widely and so do their priorities as they emerge from it. But none is immune from the risk of a future—and inevitably global—financial crisis. Unilateral actions by governments risk being undermined by tax and regulatory arbitrage. Effective cooperation does not require full uniformity, but broad agreement on the principles, including the bases and minimum rates of the FSC and FAT. Cooperative actions would promote a level playing field, especially for closely integrated markets, and greatly facilitate the resolution of cross-border institutions when needed.

Actions are also needed to reduce current tax distortions that run counter to regulatory and stability objectives. The pervasive tax bias in favor of debt finance (through the deductibility of interest but not the return to equity under most tax regimes) could be addressed by a range of reforms, as some countries already have done. Aggressive tax planning in the financial sector could be addressed more firmly.

More analysis will be undertaken to assess and refine these initial proposals. The final set of proposed measures, including more details on key design elements, will be delivered to the G-20 leaders for their June 2010 summit. This work will be guided by the discussions at the April 2010 ministerial meeting, further consultations as well as the joint IMF/FSB/BCBS work on the cumulative quantitative impact of regulation and tax burdens on the financial sector.

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Sunday, April 18, 2010

Goldman deal went through Cayman Islands

Well, what a surprise. In the much-publicised fraud case involving a lawsuit filed by the Securities and Exchange Commission against Goldman Sachs, it is absolutely no surprise to us to find that this deal, known as Abacus 2007-AC1, involves:

Issuer: Abacus 2007-AC1, Ltd., Incorporated with limited liability in the Cayman Islands
Co-Issuer: Abacus 2007-AC1, Ltd., Incorporated with limited liability in Delaware


The issuer of this $2bn CDO is a Cayman Islands Special Purpose Vehicle. You can see the structure of the thing on page 51. Note also an earlier story from McClatchy's, the only one we're aware of which focused strongly on the offshore aspect, and which notes that Goldman had 148 of these kinds of deals in the Cayman Islands.

"These Cayman Islands deals, which Goldman assembled through the British territory in the Caribbean, a haven from U.S. taxes and regulation, became key links in a chain of exotic insurance-like bets called credit-default swaps that worsened the global economic collapse by enabling major financial institutions to take bigger and bigger risks without counting them on their balance sheets.
. . .
In 2006 and 2007, as the housing market peaked, Goldman underwrote $51 billion of deals in what mushroomed into an under-the-radar, $500 billion offshore frenzy, according to data from the financial services firm Dealogic. At least 31 Goldman deals in that period involved mortgages and other consumer loans and are still sheltered by the Caymans' opaque regulatory apparatus.
. . .
Taxpayers got hit for tens of billions of dollars in the Caymans deals because Goldman and others bought up to $80 billion in insurance from American International Group on the risky home mortgage securities underlying the deals."

And of course, there's the opacity:

Goldman's Caymans deals were riddled with potential conflicts of interest, which Goldman disclosed deep in prospectuses that typically ran 200 pages or more.

All this is reminiscent of a document from the Bank for International Settlements, which we've blogged before, and which notes:

"The most common jurisdictions for US securitisations are the Cayman Islands and the state of Delaware."

And it added that in Europe:

"the most common SPE jurisdictions for European securitisations are Ireland, Luxembourg, Jersey, and the UK."

All secrecy jurisdictions - every last one of them.

Now in the latest round of stories about Goldman's alleged fraud, nearly every newspaper has ignored this fact, although to credit of a minority, including the FT, it was not ignored entirely -- though still only in passing.

Can't anyone see that there is a pattern here?

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Saturday, April 17, 2010

Sign U.S. Tax Day declaration

For U.S. citizens, please sign this Tax Day declaration from U.S. PIRG, and read this supporting article in the Huffington Post.


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Friday, April 16, 2010

Transfer pricing and gold mining in Senegal

British satirical magazine Private Eye, which often carries excellent financial scoops in its back pages, has a story in the latest edition (No.1620, 16 April 2010) about how Australian mining company Mineral Deposits Ltd, which extracts gold from the Sabodala region in Senegal, West Africa, and ilmenite and zircon from quarries on the Grand Cote north of Dakar, declares no profits in that country.

Instead, according to Private Eye, profits are diverted to Mauritius, in the Indian Ocean, which - alas for it - has no gold, but happily for Mineral Deposits has a tax rate on corporate profits of zero percent [though according to Mauritian deputy prime minister, rumours that the island is a tax haven are a "myth" - and the OECD agrees. Needless to say, TJN isn't taken in by such denials].

We won't take you through the various steps in this process since the Eye has kindly explained these in full here. But here are a few highlights:

"Senegalese gold mining company Sabadola Gold Operations SA is owned through a Mauritius company, Sabadola Gold (Mauritius) Ltd, while zircon mining company Grand Cote Operations SA is similarly owned by a Mauritian company, Mineral Deposits Mauritius Ltd. In 2009 the Senegalese gold company paid A$12.4m in tax-deductible “technical assistance” fees to its Mauritian parent, while the zircon ilmenite mining company paid A$1m to its Mauritian parent for the same “service”. Strangely, no technical services or anything else are performed in Mauritius. A Mineral Deposits employee in Dakar admitted to the Eye it doesn’t even have an office in Mauritius."

Alongside 'technical services' or lack thereof, Mineral Deposits also leases the mining kit used by its Senegal operations through a Mauritian company. But that's not the end of it. As the Private Eye article points out, despite global borrowings of just $65 million across its entire operation, Mineral Deposits charged tax deductible interest payments of A$42 million to its Senegalese subsidiaries in 2009:

"Even these tricks pale next to the financial alchemy that last year created A$42m in tax-deductible interest payments by the Senegalese companies to the same Mauritian companies they paid technical assistance fees to. Such interest would require loans from the tax haven of around $800m, yet Mineral Deposits Ltd’s worldwide accounts show the company and all its subsidiary operations had borrowings of just $65m between them. The extra debt was simply created internally to shift profits around tax-efficiently."

This raises pretty large questions about the capitalisation of the Senegalese subsidiaries. And whilst on that subject, Mineral Deposits Ltd receives investment finance from private equity fund managers, including Actis, which was created back in 2004 when the British government's overseas development fund, the Commonwealth Development Corporation, re-branded its fund management operation.

The end result is entirely predictable. Despite the corporate commitments to sustainable development and all that bla-bla, despite high-level rhetoric about cracking down on tax havens, and despite bold words about helping poorer countries develop self-reliance through mobilisation of their own resources, its the poorest countries that suffer. In this instance, according to Private Eye:

"With the help of these schemes, in 2008 and 2009 Mineral Deposits paid just A$45,000 in tax (around £20,000), while benefiting from tax exemption to the tune of A$14.6m, which would provide quite a few Senegalese schools and hospitals."

As a final remark, we at TJN are frequently challenged by accountants and others to provide evidence of our concerns about trade mis-pricing and the inadequacies of transfer pricing rules. Here it is.

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Kenya Tax Justice Report makes the case for greater tax equity

Tax in Kenya is something that for a long time was thought best left to the experts. This perception has resulted to ordinary Kenyans being unaware of how the tax system has a direct impact their lives and livelihoods. The Kenya Tax Justice Report (available here in a printer-fiendly format, and here in wide-screen format) addresses the human welfare linkages in taxation.

Rights-based campaigns such as those calling for housing rights, and women's rights and in particular better maternal health provisions should link up with tax campaigners who call for greater tax equity. These and many other rights can only be achieved through adequate and equitable revenue collection. Why are capital gains no longer taxed in Kenya? Why have propety taxes contributed so little in overall revenues?

Among the findings the report quotes that for the year 2001/2002 the tax effort varied from 85 per cent on the beer excise tax, to 65 per cent on personal income tax, 56 per cent for the value-added tax, while corporate tax was the lowest at 35 per cent effort.

Extrapolating for 2007/2008 the report concludes that the Tax Gap for Kenya measured as the distance between tax capacity and tax effort stood at Ksh 264 billion (US$ 3,4 billion at time of writing), meaning the the Tax Gap for the year 2007/2008 stood at 55.1 per cent.

From the revenue collection data over the past 10 years it seems that only the corporate tax effort and pay as you earn (PAYE) tax collection have improved somewhat. Whether this is due to higher profitability or greater effort in revenue collection cannot be concluded from existing data as the tax effort isn't regularly measured.

The findings reveal that civil society needs to start monitoring government revenue collection, and also crucially the tax burden. For instance, the Value-Added Tax (VAT) - representing 29% of revenue collection in 2007/2008 - may fall predominantly on low-income people.

While basic food items such as bread, flour and milk are exempted from the 16 per cent VAT, a large part of the expenditure of poor people today are for transport and mobile phones. The Road Levy Maintenance Fund (RLMF) is financed by a per litre petroleum tax of Ksh 5.8 for petrol and Ksh 9.0 for diesel. Mobile phone airtime vouchers not only have the 16 per cent VAT, but also an additional 10 per cent excise tax. The 'poor persons burden' should be measured more carefully in Kenya.

The report also touches on international institutions such as the OECD, IASB, IMF and the United Nations who influence Kenya's tax policy in many ways. How beneficial are double-tax agreements (DTA) to Kenya? One Nairobi-based tax analyst quoted in the report considered that tax losses due to the DTA with the UK may be significant:
‘In all the treaties, the UK treaty is probably the most aggressive with regards to the reduction of withholding taxes. For instance, whereas the domestic withholding tax rate on management fees stands at 20 per cent that under the UK/Kenya treaty stands at 12.5 per cent, that with Germany is at 15 per cent while with India it is at 17.5 per cent.’
The report maybe raises more questions than answers them, which is why a major part of the proposals actually ask for further research into six specific areas from trade mispricing to public finances in identifying the leakages and proposing solutions.

The good news is that there is plenty of more taxes to be collected in Kenya - and the future of the Kenyan state is in tax financing rather than debt or aid financing. Taxation has the potential to contribute for political autonomy, national unity over a shared interest and fiscal independence.

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Call for G20 action to tackle illicit financial flows

TJN is delighted to be part of a massive global coalition of civil society organisations with a shared focus on corrupt practices calling on the G-20 countries, in advance of their global summit meeting this year in Toronto, Canada, to tackle the issue of illicit financial flows.

Call for G-20 action to tackle illicit financial flows

We, the undersigned civil society organisations, urge the Group of Twenty Countries (G20) to:

- recognise the link between illicit outflows of capital from developing countries, absorption of those resources by tax havens and secrecy jurisdictions, and the adverse impact those flows have on poverty alleviation and economic development;

- call on the Financial Action Task Force to amend its recommendations 33, 34, and VIII to provide that the beneficial ownership of all companies, trusts, foundations and charities be made a matter of public record;

- reiterate the need for all jurisdictions to help recover the proceeds of bribery, embezzlement and other forms of corruption, and in particular to call on states to increase resources to investigate and prosecute corruption cases; to encourage the use of both criminal and non-conviction based asset forfeiture methods, and to provide coordinated, timely and effective mutual legal assistance, as promised by the G8 Justice and Home Affairs Ministerial Declaration of 11 May 2004;

- instruct the International Accounting Standards Board to recommend that all multinational corporations report their income and taxes paid on a country by country basis; and

- call on the OECD to create and promote a single multilateral agreement for effective tax information exchange between all jurisdictions.

14 April 2010

Signatory organisations:-
Christian Aid International
EITI - NGO's for Extractive Industries Transparency Azerbaijan
Commonwealth Human Rights Initiative International
Transparency International Azerbaijan
Global Alliance Against Trafficking in Women International
Bahrain Transparency Society
Global Witness International Bangladesh
NGO Network for Radio and Communication Bangladesh
International Council of Women International
BRAC University Bangladesh
International Trade Union Confederation
Voice Bangladesh
Islamic Relief Worldwide International
Credcentre Benin
La Strada International
Club-Journalists against corruption Bulgaria
Public Services International
Buddhsim and Society Development Association Cambodia
Tax Justice Network International
Pact Cambodia
Tearfund International
Cameroonian League for Human Rights
Tiri International Federation of Environmental and Ecological Diversity for
Agricultural Revampment and Human Rights (FEEDAR & HR) Cameroon
Transparency International – Secretariat
Global Network for Good Governance Cameroon
UNICORN - Global Unions Anti-corruption Network
Humanus International Cameroon
SNAPAP Algeria
Research Alliance for Development Cameroon
Asociacion Civil por la Igualdad y la Justicia Argentina
Canadians For Accountability Canada
Fundacion Mujeres en Igualdad Argentina
FAIR (Federal Accountability Initiative for Reform) Canada
Grupo de Mujeres de la Argentina
Foro de VIH Mujeres y Familia
Argentina Transparency International
Poder Ciudadano Argentina
Chile Transparente
Transparency International Armenia
Partnership for Social Development Croatia
Oziveni Czech Republic
Transparency in Nigeria
Ibis Denmark
Women Environment & Development Network (WEDEN) Nigeria
AICO- Arab Organization for International Cooperation
Women in Publishing (WIP) Nigeria
Arab Thought Forum Egypt
Women's Right to Education Programme (WREP) Nigeria
Center for Egyptian Women's Legal Assistance Egypt
Zero Corruption Coalition Nigeria
Participatory Development Program (PDP) Egypt
Attac Norway
Fundacion Nacional para el Desarrollo (FUNDE) El Salvador
Norwegian Church Aid Norway
Youth Education Forum F.Y. Republic of Macedonia
DISCOVER Pakistan Foundation
Open Society Institute F.Y. Republic of Macedonia
GINI -Governance Institutions Network International Pakistan
Transparency Zero Corruption F.Y. Republic of Macedonia
PILDAT - Pakistan Institute of Legislative Development & Transparency
Transparentnost Macedonia
Society for the Empowerment of People-STEP Pakistan
CCFD-Terre Solidaire France
Transparency International Pakistan
Helio International France AMAN
Transparency International Palestine
Plate Forme Paradis Fiscaux et Judiciaires France
Grupo de Trabajo Contra la Corrupcion (GTCC) / Work Group against Corruption Peru
Sherpa France
National Human Rights Coordination Body Peru
Transparency International France
Proetica Peru
NGO ArtIdea Georgia Business for Integrity 2020 Philippines
TRACC - Georgia
Global watch Philippines
The Johanniter Germany Public Services Labor Independent Confederation (PSLINK) Philippines
Transparency International Germany
Transparency and Accountability Network Philippines
Ghana Integrity Initiative
Transparency International Philippines
Centre for European Constitutional Law Greece
Ummah Fi Salam Philippines
Accion Ciudadana Guatemala
Asociatia Romana pentru Transparenta Romania
Stat View International
Guinea Trade Union
Elie Radu Romania
Afrikaplatform Hungary
Transparency International Russia
Civil Society Development Foundation Hungary
Transparency International Rwanda
Foundation for Development of Democratic Rights Hungary
Forum Civil Senegal
K-Monitor Hungary
REPAOC Senegal
National Confederation of Hungarian Trade Unions Hungary
Africa Youth for Peace and Development Sierra Leone
Centre for Applied Sociology India
Youth Partnership for Peace and Development Sierra Leone
Gram Bharati Samiti India
Open Society Foundation (OSF) Slovakia
The National Center For Peace & Development India
Transparency International Slovakia
Transparency International India
Integriteta-association for ethics in public service Slovenia
Indonesia Corruption Watch
Transparency International Solomon Islands
LEIP Indonesia
Human Rights Trust of Southern Africa South Africa
National Law Reform Consortium Indonesia
Institute for Security Studies (ISS) South Africa
Partnership for Governance Reform / Kemitraan Indonesia
T.F.A.C (The Fight Against Corruption ) South Africa
Telapak Indonesia Heungsadan
(Young Korean Academy) Transparency Movement South Korea
Transparency International Indonesia
K-Pact Council South Korea
Iraqi Center For Transparency and Corruption Iraq
Transparency International Korea South Korea
Kurdistan Anti Corruption Network Iraq
Transparency International Sri Lanka
Dochas Ireland
Transparency International Sweden
Transparency International Ireland
Basel Institute on Governance - ICAR Switzerland
OMETZ Israel
Transparency International Switzerland
Campagna per la Riforma della Banca Mondiale (CRBM) Italy
Uniting Church in Australia Synod of Victoria and Tasmania
AfricCOG - Africa Centre for Open Governance Kenya
Transparency International Chinese Taipei Taiwan
Bunge la Mwananchi Kenya
Luta Hamutuk Institute Timor Leste
Kenya tuitakayo: Citizens’ Coalition for Constitutional Culture
Transparency Institute Trinidad and Tobago
Transparency International Kenya
Transparency International Uganda
Kuwait Transparency
Water Governance Institute Uganda
Public Investigation Bureau Latvia
Association for Accountancy and Business Affairs United Kingdom
Actions for Genuine Democratic Alternatives (AGENDA) Liberia
Partnership for Transparency Fund United Kingdom
Center for Transparency & Accountability Liberia
Protimos United Kingdom
Transparency International Lithuania
Rights & Accountability in Development (RAID)
Transparency Zero Corruption Macedonia
Tax Research UK United Kingdom
Baholalao Integrity Safeguard Committee Madagascar
The Corner House United Kingdom
Centre for Public Policy Studies Malaysia
The office of Lord Brennan, UK United Kingdom
Libertad en accion Mexico
Trades Union Congress (TUK) United Kingdom
Transparencia Mexicana Mexico
Transparency International United Kingdom
MANS Montenegro
War on Want United Kingdom
Etica y Transparencia Nicaragua
World Wildlife Fund United Kingdom
Association Nigérienne de Lutte contre la Corruption (ANLC) Niger A
merican Bar Association Rule of Law Initiative United States
African Network for Environment and Economic Justice (ANEEJ) Nigeria
Financial Intelligence Council United States
African Youth Empowerment Nigeria
Hills Program on Governance United States
Blossom Nigeria Project Nigeria
Project on Organizing Development Education and Research United States
Equity Advocates Nigeria
The Jus Semper Global Alliance United States
Grass Root Anti-Corruption Awareness Network Initiative Nigeria
Transparency International USA
Independent Advocacy Project (IAP) Nigeria
Observatorio Hannah Arendt Venezuela
Moms Club International Nigeria
Provea Venezuela
Nigeria Labour Congress Nigeria
Transparencia Venezuela
NPA Nigeria
Citizens Forum Zambia
Publish What You Pay/NEITI Nigeria Transparency International Zambia
Save Earth Nigeria
Socio-Economic Rights & Accountability Project (SERAP) Nigeria

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