The Phaserl


Is the Global Taxman Coming?

by Don Quijones, Wolf Street:

But who are they really going after?

Credit Suisse is once again under international investigation for allegedly helping its clients evade the prying eyes of national tax authorities. This comes after the bank was fined $2.6 billion by the U.S. government in 2014 for helping Americans evade taxes.

Helping high net worth private clients and corporations evade taxes, and then getting caught is not unique to Credit Suisse. Fellow Swiss megabank UBS and UK giant HSBC were fined hundreds of millions of dollars for their troubles.

The banks are not just helping their clients evade taxes. In a report titled Opening the Vaults, UK-based charity Oxfam International revealed this week that in 2015, Europe’s 20 largest banks registered over a quarter of their profits in tax havens – well out of proportion to the level of real economic activity that occurs there. Once again, Luxembourg was a top destination for funds, while in Ireland the same banks recorded profits that were 76% higher than the global average in 2015. Only the Cayman Islands was found to have a higher profitability rate.

None of this should come as a surprise. If any organization knows how to bend the rules and use and abuse the tools and levers of global finance to minimize a company or individual’s tax “footprint,” it’s today’s generation of global banks. And no matter how many fines they are made to pay, they’re not going to change their ways.

And that is bad news for today’s governments, which need increasing amounts of money to meet their obligations and service their debts, as well as rescue the banks every time they get in trouble. It is also bad news for regular taxpayers since they will have to make up the difference, until that’s no longer possible.

The U.S. government alone loses $188 billion of tax revenue each year as a result of tax avoidance, according to calculations by the International Center for Tax and Development. In China, it’s $66 billion; in Japan, $46 billion; in France, $19 billion and in Germany, 15 $billion. But it’s the resource-strained economies of the Global South that pay the highest price. Between 2001 and 2010 alone, it is estimated that developing countries lost US$5.86 trillion to illicit outflows — outflows that in most cases flowed to and through banks in places like Switzerland, Luxembourg, the Netherlands, and the City of London.

According to Oxfam’s report, there is one obvious solution to this global problem:

Create a global tax body to lead and coordinate international tax cooperation. This process could start with an International Framework Convention on Tax. Establish a clear and objective list of tax havens.

What Oxfam fails to mention is that such a body already exists — the Global Forum on Transparency and Information Exchange for Tax Purposes (GFTIETP). Most people have never heard of it, but nonetheless its influence is growing.

GFTIETP works under the auspices of the Organization for Economic Cooperation and Development (OECD) and G20. Developmental NGOs like Oxfam would much prefer to see it fall under the purview of the United Nations where developing nations might have some semblance of influence over proceedings. The Global Alliance for Tax Justice, of which Oxfam is a sponsor, is calling for the creation of an intergovernmental UN Global Tax Body as part of its Global Week of Action to End Tax Havens, which began today.

For now, however, it’s the OECD that’s running the show. And the show is getting bigger all the time. GFTIETP boasts a membership list of over 120 jurisdictions, as well as the Member States of the European Union. That’s over 150 out of the world’s roughly 200 nations, representing over 90% of the global economy, that have agreed to share the financial details of their citizens, both private and corporate.

In an article ominously titled “Why Taxation Must Go Global“, German Finance Minister Wolfgang Schäuble was barely able to contain his excitement at the prospect of technological advances and global cooperation making it possible for tax authorities to keep ever closer tabs on the people’s money (emphasis added):

“Under the CRS (global Common Reporting Standard), tax authorities receive information from banks and other financial service providers and automatically share it with tax authorities in other countries. In the future, virtually all of the information connected to a bank account will be reported to the tax authorities of the account holder’s country, including the account holder’s name, balance, interest and dividend income, and capital gains.”

Read More @

Help us spread the ANTIDOTE to corporate propaganda.

Please follow SGT Report on Twitter & help share the message.

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>