Tax Justice Network

[Moghrey Mie]

According to The Independent on Sunday 4th March The Tax Justice Network www.taxjustice.net has recently published a report 'Closing The Floodgates: Collecting Tax to Pay for Development' It criticises the Big Four accountants for 'legitimising' the use of offshore tax havens and for not taking a strong enough lead in international tax compliance.

 

They reckon poor countries are losing out because of money being placed in off-shore locations.

[Chinahand]

I'm going to be probably over forthright in this post - I'd appreciate some one pushing back telling me where I'm wrong!

 

[capitalistbastard]

 

Money is a fungible item which if it is stored in a bank rather than under a bed is always invested back in the economy where that money is useful. So when Mr Cheating B'Stard from Poor-where-ever converts all his money to dollars and puts it in a bank in the Isle of Man, the money in fact remains in Poor-where-ever, and the USD don't stay in the IOM, but eventually go back to the USA.

 

In order to convert his money into dollars Mr Cheating has to find somebody willing to buy his local currency with dollars - this person will then use the money in the local economy.

 

Mr Cheating's dollars will be recycled back to the US to be invested in worthwhile projects to pay him interest.

 

I admit ownership of money is important: but if Mr Cheating whatever sells his local money he is reasonably likely to sell it to someone who wants to use it wisely: few amateurs are willing to buy Nigerian currency or whatever - internet scams excepted.

 

Plus if he uses money advisers to invest his ill-gotten gains they should be cautious enough to maintain its value.

 

There are nuances here, I'm presenting an over glossy picture, but if Mr Cheating B'Stard keeps his ill gotten money under the bed it cannot work and earn a return - its better lent out and used by somebody else who is willing to pay the interest Mr Cheating B'Stard's bankers demand. People only occassionally borrow when they can't afford the interest payments - and even when they do there are organizations willing to take on the bankrupt's debts.

 

Theft is a crime and must be punished - but having ways to efficiently recycle legitimate money will benefit an economy far more than the occassional illegitimate uses these systems are used for.

 

[/capitalistbastard]

[Juan Kerr]

Collecting tax for development?

 

If anyone saw the Comic Relief programme on late last week one can only speculate that if certain poor nations did not have such an abysmal record when it comes to governance and transparancy things might be a bit different.

 

Africa in particular has an abysmal record of accountble government.

 

That does not excuse the argument for tax structures removing much needed money from developing nations, but their own governments and the conga line of successive greasy palms remove more money from the system than offshore accountants ever will.

[Gladys]

How true that is, Juan, how true.

[Juan Kerr]

How true that is, Juan, how true.

 

You only have to look at Mugabe. A dirty, thieving, evil, crook, who has destroyed the lives of his own people, devastated his own country, and took millions and millions of western money in the process.

 

He is the main reason I will not donate to any charity because its lining his pockets, and the pockets of hundreds of people like him.

 

If other nations stopped doing business with scumbags like him, we might all feel a little better about coughing up money.

[Pat Ayres]

very taxing subject.

[Pragmatopian]

Somewhat related is an argument I had in the pub last night, which went something like this:

• My statement - I had refused to work for a client that I considered would directly benefit a questionable regime.
  
• His argument - I am a hypocrite because, as a British subject, I have benefited from the affluence generated by grossly exploitative practices in colonial times and since. Who am I to judge?
  
• My counter argument - I can't change what is past but that doesn't mean I should stand by and allow past mistakes to be repeated in an endless cycle.
  
• His counter argument - Developed countries got rich off the back of lax social and environmental policies. The likes of China, India and the African nations can never become as affluent as developed nations unless they are allowed to exploit and pollute as we did. I am essentially arguing for their subjugation.
  

There were some side arguments about the power/powerlessness of the individual to effect change and a fair number of expletives, but I've given you the core of it.

 

Offshore centres are a tricky issue. They have undoubtedly been used by criminals to put their ill gotten gains beyond the reach of their home countries and evade taxation. They are also used to hold assets and evade tax by otherwise legitimate businesses and individuals. All things being equal, I would have to conclude that this was a bad thing, creating an unequal playing field where businesses did not compete purely based on efficiency and on the quality and innovation of their products. However, when you throw into the mix that some people use offshore centres to protect personal and corporate assets from corrupt governments it creates a difficult tension.

 

One thing I can be absolutely sure about - the main benefactors of the complicated tax systems in existence in almost every country are lawyers, accountants and bureaucrats. A system that is simple to comply with is more likely to be complied with and more difficult to evade.