Swiss should limit tax deals to EU: Geneva Banker
Reuters, October 19, 2011

Procter & Gamble and the Dark Art of Tax Avoidance
CNN Money, October 19, 2011

Marshmallows from Paris
Livemint.com, October 19, 2011

Corruption, inefficiency eat 25% of CIL output: Sriprakash Jaiswal
The Economic Times, October 19, 2011

Corruption and Corporate Fraud Take a Dip in India, says study
India Today, October 19, 2011

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Cayman News Service has blown the lid on one of the biggest lies of recent years about tax havens / secrecy jurisdiction. It’s been claimed since 2009 that tax information exchange agreements – promoted by the Organisation for Economic Cooperation and Development as the way to tackle tax haven abuse – mean that tax havens are now ‘open and transparent places’. Those most inclined to say so are minsters of the UK and the representatives of the offshore finance industry in places like Jersey.

But as Cayman News Service reports from a conference on the issue of confidentiality, obviously so secret that they omitted to mention where it was held:

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On Saturday, Jeffrey Sachs, who spoke at the 2011 Task Force Conference earlier this month, made an impassioned impromptu speech at Zuccoti Park. The speech covered a range of topics, but at 8:01, he addressed tax havens:

“Its not because we think wealth is bad.
Its because we think you cheat.
Its because you don’t follow the law.
Its because you don’t pay your taxes.
And then you say we have no money in this country,
To educate our children.
We have the money.
Its your money in the Cayman Islands.
Its Your money in the Swiss bank accounts.
And if you don’t bring it home,
We’re going to bring it home.
Because this is a country of laws.
Because this is a democracy.
And we are the 99%.
We have the votes.”

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Christian Aid just released their new video for the End Tax Haven Secrecy campaign.

Watch the (excellent) video, then visit EndTaxHavenSecrecy.org to take action today. Join us in calling to demand tax justice at the G20 summit in France in November 2011.

Tax dodging by multi-national corporations costs developing countries hundreds of billions of dollars every year, much more than the global foreign aid budget. You can read their position paper here.

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There have been more responses to Action Aid’s report on the use of tax havens by FTSE 100 companies. One on a site called Shelter Offshore is interesting. Take the conclusion first:

“Finally, a suggestion to all those people out there who expend excessive energy attempting to force a moral conscience on big name businesses with subsidiaries in low tax havens – you will never win.

Your voices and actions have absolutely no effect at all. Companies like these have shareholders to whom they are accountable. They will do the least they possibly can to show a seeming willingness for transparency, and they will do the most they possibly can to avoid as much tax as they can get away with.

Instead of fighting an unwinnable war why don’t you put your brand of persistent pressure on your governments to spend all tax revenue responsibly instead, and then and only then will you ever have any leverage to bring big corporates back in from the cold.”

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Weakening the Foreign Corrupt Practices Act Makes Sense from Neither a Moral nor Economic Perspective

American businesses sometimes argue against the Foreign Corrupt Practices Act, the U.S. flagship legislation which makes bribery of foreign officials a crime, using economics. We see this, in particular with the latest inundations of attacks from the U.S. Chamber of Commerce, which has taken it upon itself to single-handedly dismantle the effectiveness of the FCPA. These interests claim that the FCPA makes U.S. businesses less competitive internationally because other businesses from other countries are “allowed to bribe.” Of course, they don’t put it that crudely. But you get the point. They also argue that the FCPA adds undue costs to U.S. businesses—administrative costs for training and compliance for example—that make those businesses less efficient and less competitive worldwide.

Ignore for a moment the fact that thirty-four OECD countries committed to put in place similar legislation, which creates a quasi-international consensus on such issues and therefore dispels much of this “competitive” myth anyway. But the truth is, at their core, these arguments fail to reflect the dynamic nature of international business.

There’s a story—perhaps a joke—that some of my economics professors used to tell. Suppose a technological change allows a company to improve the efficiency of, say, indoor electric heating by 50%. An engineer—they would tell us—is going to assume that expenditures on heating would decline by 50%. An economist would say, not so fast. It doesn’t just matter what the initial change is—but rather consumers’ reactions to that change. Maybe consumers will leave their thermostats at the same temperature and will, indeed, save 50% of their heating costs. Or perhaps they will increase the temperature of their homes until they are paying the same amount they were before, using the same amount of electricity, but enjoying much more heat. They might even surpass that point, depending on their personal preferences.

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The importance of tax for development is widely accepted. It is also increasingly being acknowledged that a company’s approach to taxation is an integral part of its Corporate Social Responsibility (CSR). Against this background Christian Aid has produced a briefing “Tax and Sustainability: A framework for businesses and socially responsible investors”. This framework can be used by ethical investors to asses whether a company’s tax policy is responsible in its design or implementation.

Aggressive Tax planning can harm companies

The report makes it clear that there are strong commercial reasons for adopting these standards. Companies that pursue aggressive tax strategies face a number of risks including costly legal action from tax authorities, cash flow problems when a tax loophole is closed and ever increasing regulatory complexity as officials seek to keep up with aggressive avoidance schemes. Meanwhile government contracts often exclude offshore companies and increasingly public sector procurement procedures will seek disclosure about partner’s use of tax havens. Risk of reputational damage is also especially significant as spending cuts lead to greater public awareness of tax dodging in Europe. Protests by the Indignados in Spain and UK Uncut, have channelled outrage at individual companies’ tax arrangements.

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