Monday, April 06, 2009

The OECD's list: we have a better idea - the FTI

As we've recently noted, despite undoubted progress at the G20, the OECD has produced a list of tax havens that exonerates many of the world's dirtiest secrecy jurisdictions / tax havens.

Some tax havens will be rejoicing at what the OECD has provided for them. One of the things that cheerleaders for tax havens (such as Richard Hay, the attorney for STEP and for some tax havens) have been trying to do is to convert the OECD standard of exchange of information upon request being effective exhange of information, into an allegedly "international standard." (There is a better solution here, and another way of thinking about it here.)

But the key point is this - and this is enormously important - as that TJN is putting together its own list, in partnership with Berlin-based Transparency International and Christian Aid, ranking jurisdictions in a new Financial Transparency Index(FTI). This will be a more objective, and more accurate, list of tax havens and what they do. It will use a lot of the data from an even bigger project, funded by the Ford Foundation, and called Mapping the Faultlines - nothing less than a giant map of the offshore world, in all its ghastly glory. Nobody has ever done this before.

The FTI will rank jurisdictions according to their usefulness to the perpetrators of illicit financial flows and abusive tax practices. In essence, it will rank in two ways: first, it will rank a jurisdiction according to how abusive its legislation and other services are to the rest of the world, based on a set of objective criteria; and then it will weight this ranking according to the size and importance of the jurisdiction, again based on objective criteria. See more details about the methodology here.

This is a large project requiring significant research resources; we expect a first version of the FTI to be published later this year. Anyone who is thinking or speaking or writing about the OECD list is urged to remember this project, the Financial Transparency Index, and prepare for its launch. The FTI - coming soon. Watch this space.


Blogger Physiocrat said...

Why doesn't TJN go for a two-pronged attack? Most of the opportunities for tax avoidance arise due to the way that tax systems are constructed. If the tax systems are redesigned, then many, if not all, of the opportunities go away, and there is no need for draconian regulation and exchange of information between jurisdictions. TJN seems to have said nothing at all on this aspect of dealing with the problem of tax havens. This seems inconsistent.

# Transferring assets to offshore tax havens that maintain secrecy to avoid IRS detection.

If taxation is tied to land titles then there is nothing to transfer. UBR and Council Tax revenue is not lost to tax havens.

# Fraudulently taking advantage of an exemption for portfolio interest paid to foreign persons.

# Posing as foreign persons and taking advantage of U.S. income tax treaties.

If taxation is tied to land titles, the nationality of the holder is irrelevant. Again, no UBR and Council Tax revenue is lost due to the nationality of the person or company liable for the tax.

9:55 am  
Anonymous TJN said...

We get the same comments repeated from the same commenter: that land value taxes are the only way forward, and forget all the other taxes. As usual, we disagree: land value taxes have a role, but only as part of a broader tax system.

4:12 am  

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