christensen by xiaoyounan


									13th June 2007, Transnational Institute / TJNederland
The Long and Winding Road

John Christensen
Director, TJN International Secretariat
“The Tax Justice Network agenda is a direct threat to America’s
              The U.S. is a tax haven, and
economic interests.

this policy has helped attract trillions of
dollars of job-creating capital to
America’s economy. The left-wing groups participating
in today’s briefing believe that foreign governments should have
the right to tax income earned by non-residents in America and
other low tax jurisdictions – a policy that is fundamentally
inconsistent with President Bush’s tax reform agenda.”

                                     Grover Norquist, President
                                             7th April 2005
The Problem
The deliberate and
illicit disguised
expatriation of money
by those resident or
taxable within the
country of origin. Tax
evasion is often the
motive for capital
     30th May 2007

“   For each dollar of aid
that goes into Africa, at
least five dollars flows out
under the table. The time
has come to confront the

tax haven monster.
                         In the belly of the beast:

                         insider trading

                         market rigging

                         avoiding disclosure of
                         conflicts of interest

                         illicit arms trading

                         illicit political donations

“living of lax           contract kickbacks

 regulation”             bribery

   Wall Street Journal   fraudulent trading and tax
  17th September 1996    evasion
“ The openness of tax havens
to proceeds from crime,
corruption, and tax dodging
might explain why flows of
capital have been from South
             the poor
to North, from
nations of the world
to the wealthy ones,
rather than the other way
round, as economic theory
would predict.
Who owes what to whom?

Despite the massive debt incurred in
the past, Sub-Saharan Africa is a net
creditor to the rest of the world in
the sense that external assets (i.e.
the stock of flight capital) exceeds
external liabilities (i.e. external

The stock of capital flight from SSA
(estimated at $274 billion including
interest earnings) was equivalent to
145 per cent of the total debt owed
by the countries in the mid-1990s.

          Boyce, J.K. and Ndikumana, L. (2005)
                             Developing and
               Global     transitional economies

   $billions High   Low       High       Low
     / year
Criminal     549        331    238       169
Bribery,  50   30               40        20
Commerci 1000 700              500       350
Total    1599 1061             778       539
“Any survey of the main
uses of offshore funds
would have to conclude
that low tax is not the
main benefit at all; the
real attraction is their
total confidentiality.
This makes them perfect
places to lodge capital
in flight from tax,
politics or the law.”
              Financial Times
“Protected Cell companies have - in concert
with other entities - been used to construct
what has been called "an impenetrable wall"
against creditors and prying eyes. Whilst these
claims can only be tested by time, this novel
use of a PCC for asset protection and
financial privacy is an interesting approach
and a valuable piece of intellectual property.”
        the geography of corruption
             Transparency International’s Corruption Perceptions Index: 2006

                                             Country   Tax haven            2006 CPI
Country   African              2006 CPI       rank     countries             score
 rank     countries             score           5      Singapore              9.4
  156     Chad / DCR / Sudan     2.0            7      Switzerland            9.1
  155     Cote d’Ivoire /        2.1            9      Netherlands            8.7
          Equatorial Guinea
  142     Angola / Congo         2.2
          Kenya /Nigeria /                     11      Luxembourg / UK        8.6
          Sierra Leone                         15      Hong Kong              8.3
  138     Cameroon / Niger       2.3           16      Germany                8.0
                                               18      Ireland                7.4
  130     Burundi / CAR /        2.4
          Ethiopia / Togo                      20      Belgium / USA          7.3
                                               24      Barbados               6.7
                                               26      Macau                  6.6
                                               28      Malta                  6.4
                                               31      U.A.E.(Bahrain/Dub     6.2
   tackling the corruption interface

 Perceptions of corruption need to be re-evaluated
 The role of facilitators and their professional
  organisations needs to be scrutinised
 The role of tax havens as a supply side stimulant of
  corruption needs to be recognised
 Banking secrecy and non-disclosure of beneficial
  ownership should be a criteria for comparator
 Capital flight and tax evasion need to be included in
  anti money-laundering programmes
 The role of accounting standards in creating a
  framework for corporate transparency needs greater

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