Richard Murphy reports that the OECD’s deliberations on [tax] base erosion and profit-shifting (BEPS) are showing familiar signs of going nowhere. He points to the disproportionate emphasis given to the views of “business” stakeholders – I put business in scare quotes because I doubt that SMEs have much input here, this is going to be mostly the same multi-national businesses who are evading tax in the first place – read the report, and correct me if I’m wrong. So, if you hold a lot of shares in companies that record all their profits in places where they don’t have to pay tax, you can take some comfort. Otherwise, prepare for further austerity.
The Tax Justice Network dishes dirt on what the “financial services” industry of Cyprus was selling. So will the EU really close this business down in Cyprus? And will it roll on from that to the many other tax havens (or what the TJN people call “secrecy jurisdictions”) either in the EU or under the protection of various EU states? It could, in the end, go that way.
We can hope that this is a step on the road to bringing the financial sector under control. Continue reading
A few weeks back I linked to this Guardian piece, upbeat about the OECD’s sudden interest in reducing, rather than abetting, corporate tax avoidance. I posted that because it was a nice surprise, coming from the OECD; on the assumption that the OECD acts according to the wishes of its member governments, it seemed to be an indication that, perhaps, the erosion of national tax bases had gone far enough to bring on a serious reconsideration of the ludicrous and growing tax gift that we have all been giving to multinational corporations.
Now Bloomberg has to go and
spoil cast doubt on that. They detail the revolving door between the top levels of the OECD’s tax unit and the accounting and legal firms that help corporations minimize their tax payments. And they conclude by noting that the latest OECD tax chief – the new broom Continue reading
“OECD calls for crackdown on tax avoidance by multinationals” says the Guardian. The report Addressing Base Erosion and Profit Shifting outlines the problems national governments now have taxing big corporations as they move profits around the world in a shell game. Angel Gurria, the OECD’s head, is not overselling it when he says “democracy is at stake”: the legitimacy of democratic states is being undermined as they allow both large corporations and wealthy individuals to avoid taxation, shifting the burden to taxpayers of lesser means and the users of public services. And it is refreshing to see the OECD out front on this: it has no authority, but as the leading think tank of the rich industrial democracies it can help shape the consensus and provide a focal point for action. Richard Murphy – an authoritative source these matters, and long a trenchant critic of the OECD’s half measures – is pleased by the report.
What is really funny is the line “The OECD said many countries had failed to update their tax rules to cope with the digital age.” Continue reading
Julia Cagé and Lucie Gadenne find that
tariff cuts lead to lower tax revenues as a share of GDP. The drop is highest in poor countries that don’t have the capacity to compensate for lost tariff revenues with domestic taxes.
This is an important point in itself, and illustrates a more general principle that many of the benefits of economic liberalization depend on strong states. Continue reading