Global crackdown on tax evasion and tax havens
Socialist International calls for a global crackdown on tax evasion and tax havens
The Socialist International (SI) has repeatedly called for international regulation to prevent tax evasion, which is robbing our economies of trillions of dollars every year. The recent media investigation of this phenomenon comes as a resounding confirmation of our position.
In 2008, the SI created a Commission on the Global Financial Crisis, which highlighted the lack of effective international regulation and implementation mechanisms to stem tax avoidance and tax evasion.
Bank secrecy, offshore centres and tax havens rob national economies of capital vital to social welfare and sustainable growth. This escalating problem has greatly contributed to the increase of inequality in our societies, with global wealth now concentrated in the hands of a tiny minority. This has undermined democratic institutions, as politics are captured by powerful economic lobbies.
Countries facing drastic fiscal consolidation are further punished as the burden of adjustment falls squarely and unjustly on the weakest and most vulnerable groups, who cannot avoid paying their taxes.
The SI demands immediate action from international institutions, including the UN and the G20, to create a regulatory framework that will put an end to tax evasion. This framework should include incentives and rules that support effective action against tax havens and ensure more effective oversight of Credit Rating Agencies and derivative markets.
The SI Commission on the Global Financial Crisis has proposed the creation of a World Finance Organization that will set global standards, globalize enforcement, and eradicate tax havens.
We also need to consolidate and coordinate the adoption of innovative tools, such as a global Financial Transaction Tax. Such a tax would improve the transparency of financial markets, whilst ensuring a fair share of the burden and fair distribution of global resources. It would create new tax revenues, to replace the traditional taxation of capital and equity, which has been undermined by badly regulated globalization.
We welcome the fact that the SI Commission’s proposals have already been adopted by the the European Parliament, the European Commission, and by Argentina, Brazil, and South Africa. We support the French President’s, François Hollande, call for the fight against tax evasion. The President of the European Council, Herman Van Rompuy, has just announced that this issue will be on the European Council’s Agenda in May. However, the European Council has paid lip service to this issue in the past so the SI now expects decisive action, not simply statements of good intent.
The G20 should also take bolder action to push for the implementation of effective actions against tax havens. The G20 has already called on all jurisdictions to adhere to international standards of tax transparency and agreed action against those countries that do not meet these criteria. But we are still lacking real action and demonstrable results.
The international community’s challenge in the 21st century is to align a globalised economy with the values and principles of a democratic and fair society. Our global governance system has a responsibility to tackle inequality and ensure sustainable growth for all, and a crackdown on global tax evasion is a critical step to this end.