There has been an international outcry over the leaked HSBC files, which provide evidence that the bank’s Swiss arm helped wealthy clients put millions of dollars’ worth of assets out of the reach of the tax authorities. Naturally, politicians from all parties have responded by committing to holding anyone found guilty of tax evasion accountable for their actions.
Countries are competing to lower their tax rates to please the corporate giants, but the result is a massive collective loss of revenue. Only international coordination can wipe out the practice and defeat the negative influence of the Big Four accounting firms.
The Brisbane G20 Summit offered civil society groups an opportunity to renew demands for a financial transaction tax (FTT). But in the end it proved a missed opportunity to build international cooperation on financial reform.
The revelation of the leaked Luxembourg tax files and the related reporting of the extent of the tax avoidance industry in the UK should come as little surprise. Tax legislation, and its enforcement in the UK, has been based on a school of thought that encourages the unchecked forces of supply and demand to reign supreme. This, in turn, has infused business culture in Britain.
In Nigeria, as well as around the world, a majority of taxpayers view tax not as a contractual contribution to government expense, but as an involuntary tribute to be paid to avoid prosecution and penalty. Merely transcribing taxes from economic textbooks into local law will not work; tax regimes have to be developed from within the society, and targeted at the peculiar needs of the government. Tax policies have to be written by the people – and for the people. Only then would a sense of participation and expectation be truly generated, and the tax system manifestly effective.
Switzerland could soon scrap tax breaks for wealthy foreigners after Swiss socialists and labour unions succeeded in putting the country’s 150 year-old tax law up to a popular vote.
Opponents of the “scandalous” tax break have collected more than the 100,000 signatures needed for a parliamentary debate and national referendum, the Federal Council said in a statement on Thursday.
In a bid to protect its reputation as a “trusted financial centre”, Singapore is clamping down on foreigners who evade taxes by shifting money to its banks.
In a deal announced by the Singapore government and visiting German finance minister Wolfgang Schauble on Sunday, both countries will incorporate the latest Organisation for Economic Cooperation and Development standards on exchanging information in their double taxation accord.
According to a Treasury audit, the Internal Revenue Service may have unwittingly handed out $21 billion to identity thieves who filed fraudulent tax returns for 2011.
While the IRS identified about 1 million false returns and blocked about $6.5 billion in fraudulent refunds in 2011, a new report by the Treasury inspector general for tax administration reveals that as many as 1.5 million additional returns claiming $5.2 billion in fraudulent refunds might have escaped detection.
Wealthy individuals are thought to have at least $21 trillion hidden in secret tax havens – an amount of wealth equivalent to the combined GDP of United States and Japan.
The study, titled The Price of Offshore Revisited was released on Sunday by advocacy group Tax Justice Network, drew data from the World Bank, the International Monetary Fund and the United Nations, and the Bank for International Settlements.
Over the last two decades, European policy makers have imposed restrictive fiscal policies on member states. They have concentrated on the design of fiscal rules and the structure of budgetary processes but they have never thought of introducing a new tax system able to reduce unemployment and increase investments. Only one tax system could eliminate all the growth-related problems without generating side effects on domestic expenditure: a flat tax system.
