By Myriam Berber
The fight against tax havens is at a standstill. The G20 is unable to effectively combat these opaque financial centers because too many member states are involved. This is the finding of a report published on Thursday, October 13, 2011, by the NGO CCFD Terre Solidaire.
The declaration from the G20 summit in London in April 2009 was unequivocal. “The era of banking secrecy is over,” declared the leaders of the twenty richest countries in the world in their final communiquรฉ, promising to impose sanctions against “these black holes of the global financial system” through which nearly 800 billion euros transit each year. This evasion causes considerable losses for states, ranging from 350 to 500 billion euros worldwide, according to the World Bank.
What has happened two years later? A report titled “Tax Havens, G20’s Last Chance” published by CCFD Terre Solidaire reviews this issue, which will be on the agenda of the upcoming G20 meeting on November 3 and 4, 2011, in Cannes, under the presidency of France. According to the NGO, even though progress has been made, particularly with bilateral treaties, tax havens have not disappeared contrary to what the list published by the Organisation for Economic Co-operation and Development (OECD) might suggest.
-Exchange of Tax Information
Today, only five territories remain on this OECD grey list: Niue, Nauru, Montserrat, Guatemala, and Uruguay. Nearly all others have been cleared after signing at least twelve bilateral tax information exchange agreements. In nearly two years, thirty-seven territories have vanished from the OECD’s grey and blacklist, cleared for agreeing to take a step toward exchanging tax information.
However, in its study, the NGO CCFD Terre Solidaire demonstrates, with supporting figures, a more complex reality. According to the Financial Action Task Force on Money Laundering (FATF), there are 41 countries conducive to tax evasion. Finally, the NGO reveals in its report a list from the Tax Justice Network, an NGO network of specialists committed to the fight against tax havens, which highlights 73 territories worldwide. The opacity score is measured based on 15 criteria, including banking secrecy, judicial cooperation, tax cooperation, and criminal activities. Among the countries maintaining a high degree of opacity are Luxembourg, Switzerland, the Cayman Islands, Hong Kong, Liberia, and Ghana, as well as G20 members such as the United Kingdom, the United States, and Japan.
-Strengthening the Control of Multinationals
According to CCFD Terre Solidaire, the G20 is unable to publish an exhaustive list of tax havens because its members alone account for nearly 40% of the revenues benefiting from international opacity. The association also criticizes the G20 for not targeting the users of tax havens, which are multinational companies and banks.
Tax fraud poses a real fiscal plague for Southern countries. The tax evasion by multinationals deprives developing countries of 125 billion euros in tax revenues annually. This is one and a half times the public development aid received by poor countries. That is why, in the weeks leading up to the G20 in Cannes, it is urgent for CCFD Terre Solidaire to bring tax havens to the center of discussions. The NGO therefore asks the French presidency to “advance concrete proposals to strengthen the control of multinationals, end shell companies, and reinforce sanctions against financial crime.”
