A group of 300 Economists has asked for new international rules that would force firms to disclose taxable functions across the globe.
In a letter addressed to global leaders, the Economists requested the UK to lead the drive for greater tax transparency. They stated, developing nations are the main losers from tax havens.
The letter came before the UK government’s anti-fraud summit on 12th May 2016, which political leaders from 40 nations in addition to the delegates from the World Bank and the IMF had attended.
The economists felt the UK’s stand as the summit organizer along with its control over a third of the global tax havens makes it “perfectly placed” to take the leadership role.
Modified international agreements on concerns like public nation-by-nation reporting, which includes for tax havens were required at the earliest.
The governments were urged to set their houses in order by making sure all the regions that are under their control make openly accessible information pertaining to the actual beneficial holders of firms and trusts.
The measures sought were in response to the Panama Papers leak, which exposed the way affluent individuals across the globe hide assets. The leak generated extensive outrage that the regulatory agencies had not acted appropriately.
According to a signatory, the economist Dr Ha-Joon Chang of the University of Cambridge, “the tax havens serve no useful purpose. These tax havens basically allow companies and certain individuals to free-ride on the rest of humanity.”
The firms use the services of the workforce and the public infrastructure in a distinct nation and transfer the money to another nation through a shell firm which does not have any business operations there.
As per Professor Jeffrey Sachs of Columbia University, “tax havens showed how the rich and the powerful really control the levers of finance. Even with the secrecy, we’re in a more transparent world so I think our governments are being pushed harder and harder to crackdown on these abuses.”
The economists believed if tax havens controlled by the developed nations aid the wealthy escape from paying tax, it would continue to impact the credibility of global leaders in the battle against corruption and international poverty.