Four reasons why tax avoidance makes us all worse off


9:05 am - February 14th 2011

by Sunny Hundal    


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The continuing rise of UKuncut and the publication of Nick Shaxson’s book Treasure Islands has highlighted tax avoidance and tax havens like never before.

Predictably, the usual suspects on the right wail that all this is legal and should be allowed. So I think it’s time to knock down some of the arguments against tax avoidance and tax havens.

It’s worth pointing out that tax havens have fuelled tax avoidance, and vice versa. The two are not the same but are highly inter-connected; one cannot be tackled without the other.

1) The ‘Britain can’t do it alone’ myth
Toby Young says, “no country is going to act unilaterally”, and unless that is dealt with, we won’t solve the problem. Not necessarily. I’m all in favour of multi-lateral agreements on closing down tax havens, but its not impossible for a country to close tax loopholes that allow it to register overseas and avoid our taxes.

Besides, the argument that we should be competing with the likes of Monaco on corporate tax rates is an already-lost race to the bottom. They don’t have to invest in an extensive infrastructure or educate a massive population like the UK does. Companies will always argue that they can move elsewhere for tax purposes because some havens effectively charge zero rates. We can either compete with them or we can close the loopholes. And, a multilateral approach and a unilateral one aren’t mutually exclusive.

2) But don’t we all want to avoid tax? What’s wrong with that?
This is rather like saying: because people want to learn how to defend themselves, we should encourage everyone to carry around M16 assault rifles. It’s complete nonsense as an argument.

Our current laws on tax avoidance make it near impossible for poorer people to avoid tax on their income, but allow multi-national corporations to get away with nearly zero percent tax. If MPs like Tom Harris are really for minimising tax liabilities – why not make it easy for everyone to transfer their earnings to offshore accounts with ease, to level the playing field, so we can all avoid tax?

We tolerate limited tax avoidance amongst ordinary people because most still end up paying tax. However, if everyone was allowed to avoid taxes like many multinational corporations do, Britain would collapse. So the argument for tolerating the high instances of tax avoidance we have now is to perpetuate an unfair bias towards rich individuals and massive corporations.

3) Tax havens perpetuate terrorism, poverty and drug-running
Tax avoidance on the scale that multi-nationals practice cannot exist without tax havens. And those secret jurisdictions also make it quite easy for terrorist groups to stash and transfer money.

Christian Aid say that 1000 children die every day in the developing world because of tax dodging, much of it facilitated through tax havens. They help African dictators stow away their corrupt gains and keep those nations in extreme poverty.

As Paul Sagar pointed out earlier:

Tax havens and the drug trade are intimately entwined, because criminal gangs controlling the drug trade use tax havens to clean their dirty money. The drug trade is profitable, in part, because the money made from selling drugs can be transformed from dirty into clean by laundering it in tax havens. The banking secrecy and ‘no-questions-asked’ approaches which underlie tax havenry ensures that no customer is turned away – no matter where their money came from, or how much blood needs washing off.

4) Bad for competition, free markets and your pension
Tax havens make it easy for companies to hide losses and shift around money through opaque companies in secret jurisdictions. Tax avoidance simply encourages this practice, thereby making it very difficult for accountants and shareholders to find out the true financial health of companies.

Remember Enron? That’s just one example where a company hid its losses via offshore firms that held bad debts. When these companies collapse – pension funds lose out. Tax avoidance also distorts markets by giving an unfair advantage to multinationals and their army of accounts. As a result, it also stifles innovation.

There are more arguments against tax havens here. Let’s be clear: both tax avoidance and tax havens are detrimental to our society.

[PS: I'm reading Treasure Islands right now and its very gripping and eye-opening.]

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About the author
Sunny Hundal is editor of LC. Also: on Twitter, at Pickled Politics and Guardian CIF.
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Reader comments


There is a very simple way to stop companies avoiding tax. Tax business on UK turnover instead of profits. Of course, you would have to allow them to subtract the cost of purchased goods and services or some valid and useful activities, like food processing, would be put out of business overnight (that’s because the added value in the business is very low compared to the cost of materials). What you would end up with, of course, would be VAT. Just goes to show that these things are not quite as obvious as they sometimes seem.

1: the point isn’t that the UK can’t do it alone because the tax havens will continue to exist – it’s that the UK can’t do it alone because the Netherlands will continue to exist, as will our other EU partners, and we have strong commitments to freedom of movement of capital within the EU. There are two options you can take here: 1) join the loonies and leave the EU; 2) lobby the government use our power as the most influential country in shaping EU financial regulation (which is, definitely, the case) to close loopholes on an EU-wide basis.

2: Well, yes. We should tolerate legal tax avoidance, because it’s legal and the rule of law is rather important. At the same time, we should close loopholes whenever we can to minimise the ways in which companies can avoid tax in ways that we don’t want them to (as opposed to tax breaks for investing in deprived areas, etc).

3: This is a total red herring. Jersey is definitely a tax haven, but it also has anti-money-laundering policies which are just as stringent as (indeed, the same as) the UK’s. Some countries – especially ones in the Caribbean – do enable money laundering, but that isn’t inherent to being a tax haven at all.

4: Only to the extent that tax havens are also crooked. You couldn’t work an Enron-style trick via Jersey, for example.

Forlornehope: the thing is, very few UK plcs actually dodge tax on money earned in the UK. In the cases of HSBC and Vodafone, the issue is that they’ve avoided tax on profits made overseas – which wouldn’t be paid under your proposal either.

The simple numbers are clear – if we could largely eliminate the need for the cuts. The Tories have a vested philosophical interest in refusing to tackle tax avoidance.

The Christian Aid statement “that 1000 children die every day in the developing world because of tax dodging” is highly misleading.

What it is really saying is that [tax] “evasion costs the developing world at least US$160bn in lost revenue annually … If that money was allocated according to current spending patterns, the lives of 350,000 children under the age of five, 250,000 of them infants, could be saved every year.”

That’s not exactly a causal relationship, is it?

In any case, changing the UK’s tax rules would not affect tax dodging in the developing world in any way.

5. So Much For Subtlety

“And those secret jurisdictions also make it quite easy for terrorist groups to stash and transfer money.”

Any evidence that any terrorist group has ever used a tax haven to stash and transfer money? I can’t think of one example.

“Christian Aid say that 1000 children die every day in the developing world because of tax dodging, much of it facilitated through tax havens.”

Yeah but that figure is rubbish. They just made it up.

“Tax havens and the drug trade are intimately entwined, because criminal gangs controlling the drug trade use tax havens to clean their dirty money.”

Drug users and the drug trade are intimately entwined. There is the problem.

I was talking to one of the UK Uncut activists a couple of weeks ago – it became clear that the person, although nearly 30, had never actually worked (being an activist is apparently a full time job).

I suggest that all the people involved in these protests who don’t work by choice, think about whether they ought to picket themselves, as they are obviously avoiding tax, and hence not contributing to society.

If airlines have to pay more tax, then they’ll pass it on to passengers – working people taking their one holiday a year and business people trying to keep their companies and the economy going.

These protestors are not living in the real world.

“Besides, the argument that we should be competing with the likes of Monaco on corporate tax rates is an already-lost race to the bottom.”

Ding ding!

Monaco’s corporate profits tax is higher than the UK’s!

http://www.lowtax.net/lowtax/html/jmcdctx.html

33%: and they deliberately charge that on companies where most of the business is outside Monaco.

“Our current laws on tax avoidance”

Ding ding!

We don’t actually have any laws on tax avoidance. Not one single one.

We have laws against evading taxes and we have laws about paying taxes. “Avoidance” is simply your opinion of when people are obeying the latter but you think they’re doing the former.

Think of it this way: when what you, Sunny, think is tax avoidance, is also thought by hte law to be tax something, then by definition it becomse tax evasion: ‘coz it’s against the law, innit?

“Tax avoidance on the scale that multi-nationals practice cannot exist without tax havens.”

Ding ding!

Nonsense: Ritchie tells us that banks rolling forward losses is tax avoidance. This has nothing at all to do with offshore.

“Remember Enron? That’s just one example where a company hid its losses via offshore firms that held bad debts.”

Ding ding!

Nope, Enron was not about offshore. Enron was about people *lying*. You know, criminal offence stuff, blatantly telling porkies to the auditors and everyone else. That’s why they’re in jail now.

Well done Sunny. Four points made, all incorrect.

Tim: you’re right except that Enron’s scam was aided by the use of secret (not “low tax”, but “we don’t care if you’re Pablo Escobar, you can stick your money here and nobody will know”) jurisdictions. Fastow and his accomplices (including the NatWest guys) made use of these places – in the NatWest case, the Caymans – to hide the bribery that went on as part of their looting.

Ding ding!

We don’t actually have any laws on tax avoidance. Not one single one.

Having just, as an example, sent in a s138 TCGA 1992 clearance application to HMRC in connection with whether a proposed transaction has ‘the avoidance of tax as its sole or main objective’, this is what is technically called ‘bollocks’. Motive tests are a fairly well established bit of UK tax legislation.

Richard J: I hoped you’d enter this fray. From my layman-with-a-bit-of-experience point of view, *technically* Tim’s right – if an arrangement is in breach of s138 TCGA 1992, it’s illegal, and therefore it’s tax evasion rather than mere tax avoidance…

So long as you didn’t actually tell any porkies… The most likely event is you’d go to the tribunals, then to the civil courts, and then, if you lost badly, HMRC would try to seek a tax-geared civil penalty for a negligent return. It would only be in the extreme case that you perjured yourself (which falls into evasion in any case) that they’d be likely to prosecute.

(Treasure Islands, BTW, should be taken with great care. Some bits of it are fascinating (generally the bits I don’t know much about) but where I do know something on the topic, it’s occasionally quite badly factually wrong or misleading. It also has a tendency to cover up gaps in its argument by innuendo and ‘no true Scotsman’ style rhetoric.)

“Well done Sunny. Four points made, all incorrect.”

You didn’t address the point about tax havens being used by terrorist and criminal organisations.

Planeshift: I did, though.

Some bits of it are fascinating (generally the bits I don’t know much about) but where I do know something on the topic, it’s occasionally quite badly factually wrong or misleading. It also has a tendency to cover up gaps in its argument by innuendo and ‘no true Scotsman’ style rhetoric

Does Shaxson also write for Private Eye, by any chance? Because (and I’m a paid-up subscriber, and always will be) that sounds eerily familiar.

“Does Shaxson also write for Private Eye, by any chance?”

that I don’t know, but it’s Richard Brooks who has been doing the Vodafone story. And, of course, entirely cocking it up which is odd for an ex tax inspector.

john b:
Some countries – especially ones in the Caribbean – do enable money laundering, but that isn’t inherent to being a tax haven at all.

But who said it was inherent to them. The point is that they aid and abet terrorism and money laundering. That isn’t a false statement to make.

Only to the extent that tax havens are also crooked.

Well that’s ok then!

Tim Worstall:
Well done Sunny. Four points made, all incorrect.

Is this like your argument the other day that Richard was “lying” even though you couldn’t show how?

What you’ve done is taken four points out of context and said that the four different points I made are irrelevant. Amusing, but bollocks.

Monaco’s corporate profits tax is higher than the UK’s!

That doesn’t take into account the ‘effective’ tax rate, but even if I take your point about Monaco – the name can be exchanged for any of the others with near zero tax rates.

We don’t actually have any laws on tax avoidance. Not one single one.

It was short-hand for saying tax laws that enable tax avoidance. Still doesn’t disprove my point though.

Nonsense: Ritchie tells us that banks rolling forward losses is tax avoidance. This has nothing at all to do with offshore.

Who said every bit of tax avoidance was to do with tax havens? I said they were different but inter-connected.

Nope, Enron was not about offshore. Enron was about people *lying*

Jeez – you really are thick aren’t you? John b has already answered that point.

You didn’t actually address any of my main points. You just tried to pick out four points at random and try and twist them around to pretend that the four points I actually made were wrong. Feel free to try again.

“It was short-hand for saying tax laws that enable tax avoidance. ”

We don’t have any laws that enable tax avoidance either.

We have two sets here: the taxes that you have to pay and the taxes which it is illegal for you not to pay. We thus have “obeying the law”, that is, paying the tax that is due and “breaking the law” which is tax evasion.

There is no other there there. none logically possible. Either the law says you must pay tax x or the law says you don’t have to pay tax x. And that’s it.

@ Sunny

Enrom was a massive multinational and did have special purpose vehicles. The Cayman based “tax-haven” based SPVs (actually LLPs) were primarily used to pump up the price of Enron stock and hide loans in what where effectively circular transactions. They were used to hide losses and actually show increased profits – as a consequence of which Enron actually opened themselves up to paying too much tax rather than avoiding it.

Enron’s collapse had nothing to do with tax avoidance or tax havens. It had a lot to do with creative interpretation of mark-to-market accoutning rules and plain and simple accounting fraud.

Though if you’d bothered to read and understand that wikipedia link you posted you’d know this already.

Tyler/Sunny:
The Caymans’ lax rules on disclosure of money made it easier for Enron to conceal its fraud and bribery. That’s just true (the NatWest 3′s crime was lying to their bosses about the value of the Cayman company that they bought from NatWest – it should have been worth nothing, instead it was worth a fair amount of money, because it was involved in various Enron-related transactions that would have been disclosed in a jurisdiction that had proper anti-money-laundering laws.

At the same time, it’s not inherent to tax havens that they’re crooked in that way. The Caymans are, basically, crooked; the Channel Islands comply with EU anti-money-laundering laws. One of the few ways in which Richard Murphy is correct is that the Caymans and Bermuda are British colonies, and we could force them to pass the same anti-money-laundering laws that the Channel Islands and Isle of Man have.

Quite. ‘Not as dodgy as Liechtenstein, the Dutch Antilles or Panama’ isn’t the best selling point.

One of the few ways in which Richard Murphy is correct is that the Caymans and Bermuda are British colonies, and we could force them to pass the same anti-money-laundering laws that the Channel Islands and Isle of Man have.

They’ve been self-governing for 50 years (Bermuda for more than 300 years), so direct British intervention in non-foreign policy matters would require a unilateral revocation of the islands’ constitutions. The UK Govt has no legal right to force them to do anything as the law stands.

It’s also slightly odd to watch such enthusiasm for imperialism intervention from someone on the left.

Some comments here are looking distinctly imperialistic – we seem to be wanting to dictate to other democratic countries (all those named are democratic, even if Lichtenstein has a Grand Duke) how they run their own banking systems and even tax systems. Even the crown dependencies are autonomous, and should therefore not be dictated to be a Parliament in which they have no representation (does this sound familiar to anyone?).

If their banking systems (not their tax systems) are that corrupt, then should we not simply just make it illegal to deal with them without certain measures being undertaken? Seems somewhat more reasonable than imperial-capitalist arrogance and forcing other nations to do our will…

Interesting post & resulting discussion. Also, much amused how “corporations should pay their fair share of taxes” has been turned into “capitalist imperialism” by our right-wing chums :D

The UK Govt has no legal right to force them to do anything as the law stands.

The UK government has no legal right to force the Crown Dependencies (Jersey, Guernsey and the Isle of Man) to do anything. However, after some friendly chats with the UK government, the Crown Dependencies changed their anti-money-laundering laws to be the same as the UK ones.

The constitutional point regarding the Caymans and Bermuda is roughly the same: while they’re British Overseas Territories rather than Crown Dependencies, the UK is responsible for foreign affairs and internal security, and therefore has genuine leverage over them – it’s not like Australia or the Bahamas, where the Queen’s the head of state but Britain isn’t the sovereign power.

The question is “if the UK were to politely ask the Caymans and Bermuda to adopt EU anti-money laundering laws, would the people agree given the benefits that being a BOAT provides them (especially, unequivocal UK citizenship) or seek independence?”. I’ve no idea which they’d pick; if I were PM, I’d probably investigate that question.

S.Pill,

I think there is possibly a serious difference in political views here, at least as in what is important. It appears (from comments on here) that the left-wing (these are presumably economic divisions) view is generally that the most important thing is that corporations pay fair tax, and that this should be achieved even if we have to interfere with the sovereignity of other states. This seems to be justified in the name of fairness.

On the contrary the right-wing view is generally that the rule of law is paramount, and that therefore attempts to dictate the behaviour of other states is imperialism. There is also a full awareness amongst right-wingers that corporations might pay tax, but the impact falls elsewhere, so for workers, customers and shareholders alike there is actual benefit as well as potential loss in corporations avoiding taxation.

Note I (at least) am not against reducing tax avoidance. I just would like to see it discussed in a way that did not require coercing other countries which have made a decision to set their own tax rates in their own way. After all, what can we do if they refuse – send a gunboat to enforce our will?

Watchman –

Re Taxation Without Representation (although TBH for the BOATs it’s subsidy, but that spoils the fun) I’m really disappointed that we didn’t go down the French and Dutch route, and name all our remaining post-colonial possessions that actually wanted to remain British (the defining factor of the assorted BOATs) as inherent parts of the UK with voting rights in the UK parliament.

Bermuda and the Cayman Islands are each about the size of an average UK constituency. Gilbraltar’s a bit smaller, but bring it on. Anguilla, Montserrat, BVIs and Turks & Caicos would make up one between them (but hell – why not give them one each, it’d make Parliament more fun!). Then Pitcairn could go to NZ (SOMEONE ELSE’S PROBLEM), and the assorted South Atlantic territories could be represented by Baroness Thatcher.

The really annoying thing is, this was all in the plans – genuinely, it was the way the assorted Butskellite governments wanted to play it – until someone noticed we’d have to give Hong Kong back to the Chinese. Then bigotry kicked in, and the concept of “oh no, we’ll have to deal with millions of well-educated, hard-working English-speaking people who’re yellow turning up and working hard and being excellent” kicked in, and the entire BOAT policy turned to shameful hypocritical shithousery.

Until 1998, when mysteriously the remaining BOAT citizens’ rights were restored, but for some reason after that, the citizens of other BOAT places were more sceptical of our motives. Weird that, eh?

this should be achieved even if we have to interfere with the sovereignity of other states

Not as far as I’m concerned. Everywhere I’ve mentioned, the UK is sovereign. For the avoidance of doubt, I don’t think we should try and make law in Luxembourg (they have more lawyers per head than anyone) or Switzerland (big mountains and everyone has a gun).

…until someone noticed we’d have to give Hong Kong back to the Chinese. Then bigotry kicked in…

This is mostly true, but it’s probably worth considering that the driving force was less the “yellow” than the “millions”…

@26/ My father (ex career RN) tells a nice story about that HK stuff. When hte Navy finally realised that HK was going to go back, and that a) HK citizens would no longer be allowed to work for foreign armed forces and b) that HK British Overseas passprots were no damn good they made sure that an exception was put into hte agreement.

A certain subset of those passports are still good and a certain subset of HKers can still work for foreign militaries.

After all, where would the RN be without onboard Chinese laundries?

At the beginning of the month, Shaxson gave a lecture on the City of London with Maurice Glasman (the guy who wanted to to be Lord of the City of London and now pretends there is some conspiracy behind why he was denied the title).

Richard Murphy later turned the story from “the City of London is partly unaccountable” to “the City of London is wholly unaccountable”.

This is mostly true, but it’s probably worth considering that the driving force was less the “yellow” than the “millions”

ISWYM, but in hindsight it was a fail.

The EU25′s a good guide – out of the 60 million new EU citizens, who were seriously restricted from everywhere other than the UK and Ireland, we got about 2 million between us.

Now Hong Kong’s a bit poorer than Poland, but it’s a damn sight further away, wealthier than you’d think, and you can’t go home and see your wife/kids/mum for GBP60 return. And Hong Kong had 6 million citizens in total in 1997.

If we’d given them all the right to live in the UK, I reckon we’d have seen a million Hong Kong Chinese immigrants maximum – and it would have massively improved everyone’s perception of immigration.

31 – Agreed. It may actually have been less than that – at least in the medium term as the ones who fled communist rule discovered that the PRC were running HK with a pretty light touch.

Agreed. As it was, Canada and Australia got most of the benefit (“oooh, English-speaking skilled migrants who’re already assimilated to a common law system? Yes please”).

That one was the UK’s third-worst immigration policy failure (first-worst was importing whole villages of textile workers from Pakistan to northern towns in the 1960s; second-worst was abolishing reciprocal permanent leave to stay for Canadians, Australians and New Zealanders).

John B @27,

Agree about the overseas territories (although isn’t Pitcairn already generally New Zealand’s problem…).

But as you say, it’s not clear they’d want to be tied to the UK in that way – especially the Caymans, whose economy probably depends on not being so tied.

“Now Hong Kong’s a bit poorer than Poland,”

You what?

Even at PPP median HK household income is only $a couple k behind the UKs.

Vastly richer than Poland.

The biggest issue I have with corporate tax avoidance is the fact that none of right wing and/or libertarian apologists for lower or zero corporate taxes have been able to square the following circle for me; even if one accepts the “companies don’t pay tax, people do” narrative, the fact remains that we have a short to medium term “hole” in government tax receipts.

Legal tax avoidance, and the “race to the bottom” for companies seeking the lowest possible tax domicile, must surely impoverish us all? The amounts formerly paid to the exchequer by large companies such as Boots are now (perfectly legally) retained by the company.

We all know the hundreds of millions saved aren’t all going to pay the “ordinary” employees better, or reduce their prices. Hopefully a well run company will be of indirect and long term benefit to the economy as a whole of course, but 5 will get you 10 that a good proportion of the money saved by such companies goes on ever greater salaries and bonuses for fat cats, marble fountains for their HQ, increased dividends for shareholders.

In short, much of the money which used to go to HMRC is now diverted into unaccountable, private hands which will serve to reinforce inequality.

Of course, that’s probably what the Big Society actually means isn’t it?

“even if one accepts the “companies don’t pay tax, people do” narrative, the fact remains that we have a short to medium term “hole” in government tax receipts.”

We do have a hole, yes.

“Legal tax avoidance, and the “race to the bottom” for companies seeking the lowest possible tax domicile, must surely impoverish us all?”

Ah, that’s going a bit far.

1) In Keynesian economics, of course when we’re in a slump then financing govt expenditure by issuing govt debt actually enriches us, not impoverishes us. Sunny will tell you that.

2) Leaving more money in hte economy is a strange definition of “impoverish”.

But most importantly, if we do accept the argument about only people paying taxes, then we can come to a very different conclusion. If, for example, as most of the research shows, corporation tax is largely paid by the workers in hte form of lower wages then lower corporation tax should, in time, lead to higher wages for the workers. That’s hardly “impoverish”.

“The amounts formerly paid to the exchequer by large companies such as Boots are now (perfectly legally) retained by the company. ”

Ah, I see no one has told you about Boots.

Yes, it’s true, Boots is paying less in corporation tax. This is because they’re paying vast amounts in interest. Interest is a tax deductible expense.

However, interest received is not tax free. So all those people who lent the money to Boots (largely UK banks) have to pay tax on the interest they receive from Boots. And, weirdly, if it was individuals (say, rich people buying bonds) which lent the money to Boots they would be paying a higher rate of tax on hte interest than would have originally been paid in corporation tax.

The end result of this is that we do know that less corporation tax is being paid: but we don’t know that less tax overall is being paid. It could be that more tax is being paid in total.

“good proportion of the money saved by such companies goes on ever greater salaries and bonuses for fat cats, marble fountains for their HQ, increased dividends for shareholders. ”

Excellent!

Taxes on higher rate salaries are 63% at present, not the 28% of corporation tax. Dividens pay more than corporation tax rates too.

So, by increasing salaries and dividends the tax man gets MORE money than if it was just corporation tax.

Good, eh?

“In short, much of the money which used to go to HMRC is now diverted into unaccountable, private hands which will serve to reinforce inequality.”

HMRC gets more money thus reducing inequality, surely?

37

..and you actually think these people will be paying tax like the rest of us poor wage slaves…?!

That’s the funniest thing I’ve heard in ages Tim…well done.. I almost sprayed wine all over my laptop!

Tim W:

We don’t have any laws that enable tax avoidance either.

Really?
http://www.monbiot.com/2011/02/07/a-corporate-coup-detat/

At the moment tax law ensures that companies based here, with branches in other countries, don’t get taxed twice on the same money. They have to pay only the difference between our rate and that of the other country. If, for example, Dirty Oil PLC pays 10% corporation tax on its profits in Oblivia, then shifts the money over here, it should pay a further 18% in the UK, to match the corporate tax rate of 28%. But under the new proposals, companies will pay nothing at all in this country on money made by their foreign branches.

And to think that right-wingers rely on you for their agenda!

Tyler – if you bothered to read your own comment, you’d see the contradiction. I never said Enron’s collapse was entirely down to tax havens, but you accept they created those vehicles to help hide bad debts – which is my point.

Galen10,

Sorry – why is it that HMRC is more accountable with money than private individuals. After all, who the hell do you think HMRC is accountable to if not private individuals?

This is what confuses me under all this bluster, misunderstanding and quasi-imperialistic posturing, which is in whose interest is all this. It is an observed fact that the higher the rate of relative tax, the more likely tax payers are to leave that jurisdiction, and the rate of relative tax will increase if you close off legal avoidance (this is not a reason not to do it – it is a warning). So you have to be confident that the increased revenue from ending avoidance is greater than the lost revenue from tax flight plus the costs of ending avoidance for this to be a worthwhile campaign. Obviously, you could (theoretically) standardise tax systems across the globe, but all that would produce would be unnecessarily high taxes (because markets, even in tax systems, are better at determining appropriate rates than government) and therefore less investment (other than by government – which means you have to believe command economies work) and higher costs for the consumer, hence less spending. You might as well just raise VAT to achieve the same effect, but no sane person would do tha…

Well, anyway, problems of government policy aside, I cannot deny that if you believe that government is better than the market at directing spending and growth (people do, somehow…), and if you believe that you can standardise the world’s tax systems (note that personal and indirect taxes would also have to be standardised to remove tax competition), then yes, tax avoidance can be dealt with sensibly. No free marketeer is likely to believe either of those statements mind, and the interesting question of what happens to this nice system when a free-market party is elected anywhere in the world needs to be answered…

Sunny, even Richard Murphy doesn’t think that conforming to both the letter and the spirit of the law is tax avoidance now, does he?

So if a new law is brought in that says that overseas profits don’t pay UK ta, haing overseas profits that do not pay UK tax is not tax avoidance, is it?

40 Watchman

“It is an observed fact that the higher the rate of relative tax, the more likely tax payers are to leave that jurisdiction, and the rate of relative tax will increase if you close off legal avoidance (this is not a reason not to do it – it is a warning).”

Hmmnn… we keep hearing it, and yet it just ain’t necessarily so. Of course “observed fact” is probably just right wing code for “My friend Giles the fund manager says….”, and therefore about as worthy of trust.

Given events of the last few years, I’d say your unalloyed confidence in markets probably isn’t that widely shared any more.

My point, as discussed in earlier threads, relates specifically to the short term problem identified before. I’m not some anarchist, or communist calling for the end of capitalism; the issue RIGHT NOW, as Tim admists above, is how we stop up the hole in government finances.

The answer is of course two fold: the poor bloody tax payer (not the wealthy) will be expected to make up some of the shortfall, and government spending cuts will be necessary to make up the rest.

Boots went from paying around £100-125 million pa in corporation tax, to £14. It’s obviously a huge advantage for Boots, the thing is the £100 million a year they are “saving” by moving tax domicile to Switzerland, now has to be replaced.

All the potential benefits mentioned by Tim, aren’t going to magically replace that “missing” amount are they?

If corporations like Boots don’t see themselves as having a corporate social responsibility to the people of the country in which it actually makes most of it’s profit, my point is that we need to come up with another way to ensure the total tax “take” is sufficient, and that it doesn’t fall disproportionately on those who can afford it least.

By all means, lets have a discussion about how that is achieved long term; but don’t forget, that in the short term, we have a problem, and the attachment of the political right to lightly or un regulated markets isn’t going to do it.

It’s as facile an idea as the Big Society.

40. Watchman

” It is an observed fact that the higher the rate of relative tax, the more likely tax payers are to leave that jurisdiction ”

It is not actually an observed fact.

http://www.thestranger.com/images/blogimages/2011/02/09/1297319852-millionaire_migration.pdf

The argument that high tax rates might entice high tax payers to leave and we will lose the revenue is not a good argument because it concentrates erroneously on revenue. A better and more valid argument is we lose the skills in a brain drain and that has a negative knock on effect on the rest of the economy. The government are always capable of raising as much revenue as it requires to finance the state. The skilled part is doing it in the least harmful way. Moreover, we want to limit the burden of taxation not because people might leave but because it disincentives inward investment of human and financial capital.

42. Galen10

“The answer is of course two fold: the poor bloody tax payer (not the wealthy) will be expected to make up some of the shortfall, ”

How do you reconcile this assertion with the top 1% if taxpayers paying over one quarter of all income tax collected this year? In 1978 they paid 11 per cent, this year it will be 26.6 per cent from earning 12.4 per cent of total income. One certainly can’t say our taxation system is not progressive.

Rather than repost, read my recent comments on the same subject – http://liberalconspiracy.org/2011/02/13/poll-public-overwhelmingly-against-tax-avoidance/#comment-235844

In summary

Accountants are the ones creating, using and presenting to their clients. Without them these corps wouldnt know to exploit them.

Individuals do MORE tax avoidance than corps do. Seconds jobs, cash in hand, benefits, wrong tax codes etc etc etc. They owe HMRC more than the £25bn owed by corps some are getting hung up on

Tax deductions are also technically avoidance. If you start with the all avoidance is wrong, then we stop ALL tax deductions too, as these are the most common misuse and fiddle tabled by accountants.

“Even at PPP median HK household income is only $a couple k behind the UKs. Vastly richer than Poland”

Oops. Hong Kong *in 1997* is a bit poorer than Poland *in 2007*, I meant.

@44 Richard W

You’re seriously asking us to feel sorry for the super rich having to pay tax?!

It is to laugh!

Of course it’s also possible that there are many more people in that bracket now than in 1978, and of course many more people now than in 1978 making ridiculously inflated amounts in salary and bonuses than was common a generation ago.

@ 39 Sunny

You’re article is about tax avoidance. Enron didn’t avoid tax. Making your point about tax havens irrelevant.

They inflated profits and hid bad debts – they refused to release audited accounts for quite a while, and pumped and dumped their stock. The SPVs they used were based both on and offshore, but their purpose was not tax avoidance – it was to layer accounts.

Oh, and using Monbiot’s article as an example in an article on tax is pretty ridiculous – the guy is a heavily biased left wing journo with no real experience in the field. Then again, you yourself have a history of hyperbole over the facts….

Anyway;

The law he is talking about is a simplification of current dual-taxation and transfer pricing laws, and could actually lead to more tax being paid in this country.

Why? Simples….

Car Corp raises money to build a new factory in Poland. They do so in the UK where it is easier to find large bond buyers and the market is more liquid, rather than raising the money in Poland where the market is a lot smaller and the cost of debt might be higher.

The factory opens, and profits are made and booked in Poland, and tax is thus levied on those profits. In the UK however, the interest expense on their loans/bonds can be offset against profits, so the tax paid is lower.

All this law does is make it easier to bring profits back onshore – it doesn’t mean that those profits can somehow avoid being taxed. As such, it could easily *increase* the tax take in the UK. This law jsut brings us into line with most of Europe, btw….

@ 47 Galen

*is* it fair that the top 1% of taxpayers pay 25% of taxes? Is it fair to ask them to pay *even* more?

Being realistic, the left can’t endlessly squeeze the rich for money, as there simply aren’t enough of them, and they can up and leave if pushed hard enough.

@49 Tyler

The “they will up and leave” narrative doesn’t get any more convincing for constant repetition you know. No doubt some will up and leave. Good luck to them. Many more however will stay here because they actually rather like the place in comparison with the alternatives.

I’m personally all for the relatively better off paying more tax; how you actually divide up the amount we need between direct taxes, indirect taxes, contributions from companies etc. is of course the $64,000 question.

I’m not going to shed many tears however over the prospect of people earning six figures being expected to pay more than the poor, or those on average earnings. the protestations of the top 1%, or indeed 5%, that they are overburdened simply don’t ring true to me.

On balance I’d rather see the rich squeezed than the poor… perhaps that’s as good a definition of the difference between the left and the right as we are likely to find.

@ 47. Galen10

Of course no one need feel sorry for higher rate taxpayers. Incidentally your ‘super-rich’ category includes people like GPs etc. The point is that the notion that they are not already paying in our progressive tax regime is not borne out by the data. Higher rate taxpayers do not even number enough to fill three Wembley Stadiums squeezing ‘ super-rich ‘ earners is self-evidently limited.

52. Robin Levett

@ukcuts #45:

From your referenced comment:

“But soon enough tax deductibles gets tabled, takes place, and straight away you’re avoiding tax. Agreed some do this on bigger scales than others. Some simply re-label columns/items. So that new laptop for a freelance journo/blogger will have straight away become a tax deductible purchase. You get the idea.”

That’s not tax avoidance, if anything it’s tax evasion. If it isn’t, it’s a perfectly legitimate (morally and legally) business expense.

More broadly – one or toehr person, but not both (that would be tax evasion), will quite properly (legally and morally) be claiming the expense of that laptop against tax – either the freelance against his/her income tax, or the corporation against corporation tax. Where’s the guaranteed tax loss in the corporation doing so, since the freelancer may be paying Higher Rate Tax?

Or is your argument that account of legitimate business expenses should not be taken *at all* in accounting for tax?

53. Robin Levett

@Richard W #51:

“Higher rate taxpayers do not even number enough to fill three Wembley Stadiums.”

Last time I was in that neck of the woods, Wembley’s capacity was less than 100,000, not 1.33m+. Did they expand it recently?

@ 53. Robin Levett

The number forecast to pay the new higher rate on incomes above £150,000 is 275,000. The war on arithmetic self-evidently continues.

55. Robin Levett

@Richard W #54:

“The number forecast to pay the new higher rate on incomes above £150,000 is 275,000.”

There is no new “higher rate” on incomes above £150,000; there is an existing “Higher Rate Tax” paid (by c4m people) on taxable income above £37,400. If you had intended to refer to people paying the new “additional rate” payable on taxable income above £150,000, then you should not have referred to “higher rate taxpayers”.

56. Robin Levett

@Richard W #54 (contd):

…and Wembley’s capacity is 90,000.

3 x 90,000 = 270,000.

270,000 < 275,000 (the forecast of additional rate taxpayers).

Someone commenting on this blog – not me, thinks that (correctign for accuracy) "[Additional] rate taxpayers do not even number enough to fill three Wembley Stadiums".

That same person said that "The war on arithmetic self-evidently continues."

My apologies, I thought Wembley held 100,000. The original point was to counter the idea that higher earners are getting off lightly in our useless tax regime. The top 1% of taxpayers are already paying over one quarter of total income tax collected. Moreover, the 275,000 figure was to emphasise that there is no great mass of workers earning over £150,000. Therefore, a strategy of squeeze the ‘ super-rich ‘ who apparently earn over £150,000 is just posturing that will not close the deficit. The respected IFS are on record with their doubts whether raising the top rate to 50% will raise any additional revenue. There are plenty of things that could be done on the tax side to improve the fiscal deficit but raising income tax will not get the job done.

@52

My point is its an area regularly abused with item slipped in as business expenses which clearly aren’t or shouldn’t be.

The whole tax system is now simply loophole after loophole abused.

@ 57 Richard W

If the IFS or anyone else could prove that the 50% tax rate actually lost us money rather than gained us some, this would be fair enough. I doubt it is that clear cut myself, altho’ I agree that there are lots of other loopholes which should be tackled, or other ways of skiining the cat.

I know a lot of rich people (obviously) and their friends on the right are complaining that the top 1% now pay a quarter of income tax, which is more than in the past….. but isn’t that just an indication that there are a lot more rich people? ;)

I’m all for having lots of rich people to soak. I suspect a lot of the concern from people who are horrified at the huge amounts some people are paid (I hesitate to use the word “earn” for all of them) on the basis that it seems to be spiralling out of control. The amount these people pay themselves in relation to the average wage is a hell of a lot more now than in the past…. are they actually that much more talented or successful than in the past?

“The amount these people pay themselves in relation to the average wage is a hell of a lot more now than in the past…. are they actually that much more talented or successful than in the past?”

The spiralling up of those top 1% wages (and it’s even more true of the top 0.1%. In fact, almost all of the gain in hte top 1% is really in that top 0.1%) is, I think at least, explained by globalisation.

In a completely closed economy you can only earn money from those other people in that economy. So as a banker (or a football star, or Tiger Woods, or a film producer like Spielberg) you are limited to how much each of the, say, 100 million in your country value what you produce.

You might (a la Speilberg) be able to get $1 a year each out of them.

Now we have globalisation: you can still earn that amount from being top of the tree in your own country. But, if you’re “good enough”, you can now also earn some amount from the other 6.9 billion people out there.

Say, Speilberg: his income last year was around $220 billion. And that’s come at the time when Hollywood’#s foreign gross has just become larger than it’s domestic gross for the first time.

Tiger Woods doesn’t just earn a ollar or two from every golfer (through hte Nike ads etc which are aimed at them): he also gets sojme frqaction of a dollar from all those Taiwanese and UK middle class golfers the same adsd are aimed at.

As a banker, in The City….the place handles the majority of international finance. You’re not now trying to earn your living from just Uk corporate deals. You’re putting together finanings in China, mines in australia, floating Kazakh coal companies in London (all real examples).

So, if you’re in that top 0,l1% that really can compete internationally, your’re now picking up pennies from billions of people instead of pennies/pounds from millions or tens of millions.

And those just below you, those still oerating on purely national scales, are obviously going to get left behind.

Thus we see that it’s not top 10% incomes rising strongly, not even top 1%. It’s top 0.1 % incomes which are soaring out of sight.

I’ll agree, this isn’t all of it, it’s not everything. But I would insist that it’s from some of to a goodly chunk of it.

61. Robin Levett

@Galen10 #59:

“I know a lot of rich people (obviously) and their friends on the right are complaining that the top 1% now pay a quarter of income tax, which is more than in the past….. but isn’t that just an indication that there are a lot more rich people?”

No – it means that the top 1% are relatively “richer” (if, by rich, you mean high-earning) than they were.

@60 Tim Worstall

You may be right about the fact it is the top 0.1%, and that globalisation is a factor. However 5 will get you 10 that there are now a hell of a lot more earning between £150k and the truly stratospheric, telephone number amounts than was the case in the past, AND that the general disparity between what these people earn is much greater than it used to be. In fact income inequality in the UK is getting worse, no?

63. Robin Levett

@UKcuts #58:

“My point is its an area regularly abused with item slipped in as business expenses which clearly aren’t or shouldn’t be.”

If they aren’t business expenses, or shouldn’t be, then that is evasion, not avoidance, and illegal.

How do you propose to avoid the abuse you see? Prohibit claiming business expenses back against tax – which makes the tax a turnover tax which will be eclaimed in pricing – or scrutinise claims on a case by case basis? Funnily enough, the latter is happening now.

Glad to see the mention of Christian Aid’s work on the damage done by financial secrecy in tax havens. To clarify, a major part of our concern about haven secrecy is that it facilitates tax dodging by multinational companies.
We estimate that tax dodging by such companies currently costs developing countries more than they receive in aid each year. It’s a huge problem for their public services, just as it is in the UK.
If people want to see how Christian Aid calculated the number of children’s deaths associated with tax dodging, then have a look at the technical appendix of our 2008 report, Death and Taxes: http://www.christianaid.org.uk/images/deathandtaxes.pdf

65. Luis Enrique

Rachel.

Your technical appendix states:

“Table 1 shows the calculation of tax losses due to commercial tax evasion, using transfer mispricing and false invoicing. These two forms of evasion are estimated to account for about 7 per cent of global trade transactions each year. We combine this figure with World Bank figures about the volume of trade and corporate tax rates in order to calculate the implied loss of tax revenues.”

How can the percentage of trade transactions accounted for by transfer mispricing and false invoicing be combined with trade volume and tax rate data to estimate lost tax revenues? There is no information here that I can see about how much tax is being avoided via transfer pricing and false invoicing.

I have no idea how much tax is lost to developing countries by multinationals cooking the books to reduce reported taxable profits, but I’d have thought that makes up a very small part of the problem of raising tax revenues in LDCs.

You regression show a positive association between aid and infant mortality – do you really want us to take these regressions at face value?

Your regressions tell us that controlling for GDP, countries with higher tax revenues as % of GDP are associated with lower infant mortality. What else might be associated with higher tax revenues as % of GDP? Better quality of governance, perhaps? Quality of economic institutions etc. probably has a lot to do with infant mortality. How do you know your regression aren’t picking up that – you don’t control for it. What happens if you give a low quality government more revenue? Does it go out and spend it saving infant lives? Why don’t you try sticking some measures of governance like CPIA ratings into your regression and seeing if those negative coefficients survive

You just cannot claim that giving LDC governments more tax revenue will save X lives. I know it’s in the service of a good cause, but it’s bullshit. If you want to know what an increase in government revenues would do to infant mortality, look at something tells you, like the effects of a natural resources windfall or increase revenues from changes in terms of trade.

If a corporation is attracted to a country because it gets a tax break, and provide jobs, that might save a few lives. So can you really say low taxes are killing infant when they might also be affecting which firms do what business where?

Taxes are to some extent a political choice, and if firms suddenly decided to change their ways and start paying more taxes on profits, taxes may be cut elsewhere. You cannot carry on as if higher tax payments from corporations would just be added to government revenues with no offsetting changes.

Luis Enrique, thanks for your questions, which Rachel passed to me as one of the authors of the report in question. Apologies for the delay in replying, I’m meeting partners in the Dominican Republic.

On your first question, of how we make the calculation, the key thing to recognise is that we’re using estimates of the illicit capital movement through trade mispricing – that is, the untaxed component where we are talking about profit-shifting. Combining this with the applicable tax rate gives a ballpark figure for the implied tax loss – although you are of course right to suggest that in some cases paying the right amount of tax might induce changes in corporate behaviour. There is no reliable estimate of elasticity that could be applied globally, however. I think I’m right that we refer to the estimate as the top end of implied losses.

You point out that there are other causes of tax loss in developing countries, which is of course true; but you suggest that this is likely to be small in relation to other aspects. In a handful of cases this is clearly true; most obviously where massive tax exemptions and ‘incentives’ are provided for foreign direct investment, despite the likes of McKinsey and the IMF being unanimous in denying the potential benefits. We could argue about whether these constitute tax ‘losses’ in the same sense, I suppose, but this is a diversion really.

There is a broad consensus (from e.g. the loss to Germany found in Harry Huizinga’s detailed assessment of European corporate balance sheets, to our analysis here and subsequently the more robust work using detailed trade data in our report False Profits, to the leading analysis of Global Financial Integrity) that the scale of tax losses to profit-shifting is in the region of 10-15% of the total – and the human implications of that are of course dramatic.

In relation to the regressions run, you note the positive coefficient on aid. I can see why you might question that, but the text does explain this – “No clear association is expected for aid; while it may have an impact in reducing mortality it may also have been targeted at those countries with higher existing mortality rates, which will complicate the relationship.” – I would also note that only once is the coefficient significant, and then only at the 10% level which is not generally considered terribly meaningful.

Your points on governance are interesting, and indeed this relates to one of Christian Aid’s major motivations in starting to campaign on this issue. You question whether the absence of governance quality indicators from the regressions would not prejudice the results. In fact, their inclusion would do so, because there are multiple results (see e.g. various works by Michael Ross, James Mahon and Wilson Prichard) that demonstrate that tax is a key driver of improving governance and the strength of democratic representation. For this reason, raising the level of tax revenues in developing countries over time leads not only to greater funds being available for expenditure, but – ultimately more importantly – to increasing quality of that spending (in terms of the likely human benefits, the reflection of citizen preferences).

Similarly, your suggestion that the example of natural resource wealth be considered is somewhat misplaced – since it is precisely the non-tax nature of the resulting government funds that undermines not only the impacts of expenditure but also over time the quality of governance and representation, since government need no longer not rely on citizen compliance to raise revenues. Countries which have seen massive GDP growth from oil, coupled with rising child mortality (eg Nigeria and Angola) are cases in point.

Finally, you refer back to the elasticity point. In addition to the above response, I would add that high-profile non-payment of tax does not only cost the revenues in question. The experimental economics results of Torgler et al imply that it is also likely to undermine tax compliance elsewhere in the economy, and that in turn will undermine governance and further reduce revenues.

So – is the calculation in the report absolutely precise? Of course not. Is each step reasonable, and the resulting implied scale of the damage done likely to be in the right ballpark? I think so. And that’s why we would hope that you would agree with us that some key measures requiring greater financial transparency in relation to tax are now long overdue.

67. Luis Enrique

Alex,

thanks very much for your response. I appreciate the difficulties involved in trying to do what you’re doing. I apologize for using the word ‘bullshit’, although the accepted academic analog “highly questionable” that I would use isn’t so much better.

thanks for explaining more about the tax loss calculations.

yes, the aid coefficient may reflect non-random allocation (one would hope) – tax/GDP levels aren’t randomly allocated either.

The reason why people think that taxation has a lot to do with state building, quality of expenditure (I think we’re both familiar with the same literature) is to do with a quid pro quo arrangement between governments and citizens, where quality of governance and taxation co-evolves.

You are lobbying for, I presume, either a change in international regulation to further clamp down on things like transfer pricing etc. or a voluntary change in behaviour on the part of multinational firms. That is much more like an exogenous shock to government revenues – like a rise in the price of cocoa when the government taxes cocoa exports – than the co-evolution of government accountability and citizen taxation. If international laws change to force companies to pay more tax on their profits in LDCs, they aren’t going to lobby politicians to raise healthcare spending. If and LDC wants to start taking income tax from the middle classes, it will probably have to improve the provision of healthcare services. So to do what you’re trying to do, you need something like an exogenous shock to government revenues, interacted with controls for institutional quality. If you want to argue that tax/GDP bears a strong causal relationship with quality of governance and it’s that which is really driving infant mortality, then really you need to estimate the equation that relates exog changes in tax/GDP to institutional quality and thence to infant mortality. So I’m afraid I don’t think you are in the right ball park yet.

[I think you're overstating things to say there are no potential benefits to using tax concessions to attract FDI too].

68. Luis Enrique

Oh – but I do of course agree with you that there are lots of improvements to be made to the international and domestic dimensions of taxation, and that doing so would ultimately save some lives.

Luis, thanks for this. I think there is broad agreement about the importance of addressing the obstacles to effective taxation in developing countries, only now a question of the best ways forward. Increasingly too, from the OECD and IMF to the G20 and individual countries (richer and poorer), there is growing consensus on the importance of transparency mechanisms as part of this.

I should have said that our work is aimed not only at addressing the international aspects of tax (distribution of taxing rights between countries, and opacity in general) but also at the domestic constraints – lack of capacity of tax administrations (a particular issue in low-income countries), and lack of ‘citizenship’ around tax (often the key issue in middle-income countries).

On the latter, I don’t know if you can read Portuguese (I struggle, but even the tables are pretty striking) but you might be interested in the latest report from the Conselho de Desenvolvimento Econômico e Social of Brazil. This is a tripartite body, based in the Presidential Palace in Brasilia and made up of representatives of government (President Dilma Rousseff at the head), the private sector and civil society. They have been focusing particularly on tax injustice – see the fifth report down on this page: http://www.cdes.gov.br/conteudo/6808/publicacoes-do-cdes.html.

They identify five obstacles to tax justice in Brazil, one of which is a lack of ‘citizenship’ around tax. They relate this to the ‘invisibility’ of most of the increase in tax/GDP over the last fifteen years, from around 26% to near the OECD norm of 35% – an increase which is completely unprecedented in a peaceful democracy. Those earning less than twice the minimum wage are found to pay 49% of their income in tax, while those earning more than 30 times the minimum wage are paying only 26%.

However, almost the entirety of the tax paid by the first group is indirect, while a good share of that paid by the second group is direct taxation. As a result, those towards the higher end of the income spectrum perceive themselves to be disproportionately funding the state to pay for basic services etc, and are correspondingly vocal in expressing their demands; while those at the lower end of the spectrum are little engaged and little heard as a result.

The international aspects come back in when you realise that the absence of ownership information, and of a clear ability to identify the share of profits made in the country, more or less remove the possibility of effective, progressive taxation – even when the tax administration is highly engaged on these issues and has developed innovative ways to address the use of tax havens, and to bypass some of the limitations of the OECD transfer pricing approach.

For a country like Brazil, the issue is not so much of revenues per se, but (i) whether revenues can be raised in a progressive rather than regressive way, and (ii) whether this is done in a way which promotes, rather than undermining, a broad-based engagement on the use of those revenues. The report also identifies the related, low ‘social return’ on taxation – that is, the low level of social spending as a share of the total tax take – which results from that lack of citizenship.

To return to the question of whether the result of a step change in international transparency would be equivalent to an exogenous shock to revenues and/or investment incentives, I don’t take the view that the immediate effect would not necessarily be a dramatic increase in revenues. Rather, there would be likely to be a gradual change in the way that companies structure their business, to remove the elements of tax-motivated behaviour that would become no longer worthwhile. In addition, the extent to which taxing rights are unequally distributed between jurisdictions would become clearer, leading to growing pressure for a more just distribution.

For low-income countries, there are likely to be immediate revenue effects – although not necessarily of the scale of 10% of revenues at first – while for middle-income countries the opportunities for progressive taxation will be increased. In each case, there is likely to be a movement towards a greater share of direct taxation in total government expenditure – which, per the work of James Mahon in particular, is likely to be associated with improving governance and democratic representation.

We’re currently in the process of assembling a higher-quality data set on tax revenues and expenditures to allow for a more robust assessment of some of the key results in the literature – do drop me an email (acobham at christian-aid.org) if you’d like to explore some of the possibilities this would raise for further research.

70. Luis Enrqiue

Alex,

well, thanks for another thoughtful and gracious response.

I appreciate the story you are telling about the broader effects of transparency and taxation reform on the behaviour of firms and individuals throughout an economy, and the knock-effects for institutional quality etc. I’m afraid I remain unconvinced that this story is well captured by the regressions in that report.

If you are interested, I’m a convening a panel on Domestic Revenue Moblization at an EADI conference in September, Mick Moore will be there I think, why don’t you come along? my email luisenriqueuk@gmail.com (not my real name!)

http://www.eadi.org/gc2011

I seem to remember you writing something about wanting access to the IMF GFS stats … I’m sure anybody at IDS could get you that… in the meantime, have you seen these:

http://www.africaneconomicoutlook.org/en/database-on-african-fiscal-performance/

Sunny, you say “I’m all in favour of multi-lateral agreements on closing down tax havens”.

So let us bring pressure on the next G20 (Cannes, France, November 11) to get it at the top of the agenda.

“Ensuring global economic recovery” and “Strengthening the international financial regulatory system” are already among the main aims of the G20.

Cameron will be going. We need to persuade him that closing down the tax havens would be desirable, as he will be the main drag on reform.

I not satisfyed by you answer I think there are many causes for tax evasion and avoidence …Think about high tax rate and double taxation..but thanks for you explanation


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    Four reasons why tax avoidance makes us all worse off http://bit.ly/gJLHPq (from earlier, cc @UKuncut)

  34. UKFreeNews

    RT @sunny_hundal: Four reasons why tax avoidance makes us all worse off http://bit.ly/gJLHPq (from earlier, cc @UKuncut)

  35. Paul Kindred

    RT @sunny_hundal: Four reasons why tax avoidance makes us all worse off http://bit.ly/gJLHPq (from earlier, cc @UKuncut)

  36. Ryan Duffer

    RT @sunny_hundal: Four reasons why tax avoidance makes us all worse off http://bit.ly/gJLHPq (from earlier, cc @UKuncut)

  37. Robert?Macmillan

    RT @sunny_hundal: Four reasons why tax avoidance makes us all worse off http://bit.ly/gJLHPq (from earlier, cc @UKuncut)

  38. Dave Ludlam

    RT @sunny_hundal: Four reasons why tax avoidance makes us all worse off http://bit.ly/gJLHPq (from earlier, cc @UKuncut)

  39. Natalie Jewell

    RT @sunny_hundal: Four reasons why tax avoidance makes us all worse off http://bit.ly/gJLHPq (from earlier, cc @UKuncut)

  40. gertiepink

    RT @sunny_hundal: Four reasons why tax avoidance makes us all worse off http://bit.ly/gJLHPq (from earlier, cc @UKuncut)

  41. willjoseprado

    RT @sunny_hundal: Four reasons why tax avoidance makes us all worse off http://bit.ly/gJLHPq (from earlier, cc @UKuncut)

  42. wn hub

    RT @sunny_hundal: Four reasons why tax avoidance makes us all worse off http://bit.ly/gJLHPq (from earlier, cc @UKuncut)

  43. MS

    Four reasons why tax avoidance makes us all worse off | Liberal …: It appears (from comments on her… http://bit.ly/eUnw65 – Freedom!

  44. sunny hundal

    For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  45. Nemesis Republic

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq #ukuncut

  46. nick beall

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  47. Alison Charlton

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  48. Just Another Gooner

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  49. LucaHelvetica

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  50. AnnaKt

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  51. Hayley Moseley

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  52. TeresaMary

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  53. Jessica

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  54. J-P Stacey

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  55. UKFreeNews

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  56. braddowski

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  57. Susan Inwards

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  58. John Warrender

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  59. Sali Owen

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  60. Sean Gallagher

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  61. wn hub

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  62. Roger Thornhill

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq // in your dreams

  63. Guy Manchester

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  64. Ross Baxter

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  65. hellsbell

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  66. sunny hundal

    @hazew @kiramadeira besides, you having an ISA is not the same as corp tax avoidance http://bit.ly/gJLHPq

  67. V Wakefield-Jarrett

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  68. Stephen Lintott

    RT @sunny_hundal: For ppl still justifying tax avoidance – four reasons why it makes us all worse off http://bit.ly/gJLHPq

  69. Pickled Politics » Why UKuncut doesn’t directly target the HMRC

    [...] tax avoidance is ok or not; it is purely about strategy. I’ve written a separate article with four reasons why tax avoidance harms our economy, including enabling [...]

  70. Dan Hodges

    Anyway, while we wait for @sunny_hundal to condemn Ken, I would strongly recommend the following article http://t.co/kYDwbtIq

  71. therightleft

    Anyway, while we wait for @sunny_hundal to condemn Ken, I would strongly recommend the following article http://t.co/kYDwbtIq

  72. George Maddocks

    Anyway, while we wait for @sunny_hundal to condemn Ken, I would strongly recommend the following article http://t.co/kYDwbtIq





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