Utrecht COFFERS Team in the News: Money Laundering in the Netherlands

COFFERS made it to the headlines of the Dutch newspaper Trouw. The new money laundering estimates made by the Utrecht COFFERS team in The Netherlands found it to be €16 billion. This accounts for 2.5% on average of the Dutch GDP in the last few years. “The danger for the Dutch economy is that criminals undermine the legal economy, because they are active in many sectors of the Dutch economy,” Coffers project leader Prof. Dr. Brigitte Unger said. Coffers team member Ass. Prof. Dr. Joras Ferwerda mentioned increasing fraud as the biggest danger.

Brigitte Unger on de Volkskrant

On S aturday, March 9, 2019, COFFERS project coordinator Prof. Dr. Brigitte Unger was asked to comment by the Dutch newspaper de Volkskrant on the money laundering scandal of Troika Bank. Regarding the alleged wrongdoing of some Dutch banks funneling billions of Euros through Russia using Lithuanian banks, Dr. Unger said, “It is a game of cat and mouse, in which the mice are winning at the moment”.

Brigitte Unger Organizes Workshop on Tax Morale and Compliance

On March 4 and 5, 2019, COFFERS project leader Brigitte Unger organized a workshop on tax morale and compliance, and welcomed at Utrecht University two well renowned professors in the field of tax evasion, economist James Alm and psychologist Erich Kirchler. 

On the first day of this workshop, after an introduction to the project, the topics of tax behavior and tax morale were introduced, and the rationale behind tax evasion and avoidance were discussed. This led to a stimulating debate on the causes that bring people to cheat and on the impact that social networks might have on tax evasion.

On the second day, prof. James Alm from Tulane University and prof. Erich Kirchler from the University of Vienna, gave a public lecture targeting the external factors that influence people’s behavior in paying their taxes.

Prof. Alm focused on the relationship between technology and tax compliance, illustrating the motivations of individuals in deciding not to pay their legally due tax obligations and providing an interesting insight on what cashless societies could mean for the future of tax related matters. Consequently, prof. Kirchler presented the interactions between power and trust of tax authorities, explaining that both factors are fundamental to understand voluntary and enforced tax compliance. 

Through this lecture, the cultural as well as normative elements that lead people to pay or avoid taxes were discussed, and the audience was given a deeper understanding on tax evasion and tax compliance.

Utrecht University Team Hosts Workshop on Tax Gaps

On December 4 and 5, 2018, COFFERS project coordinator Brigitte Unger organized a workshop to tackle the pressing issue of tax gaps, and managed to invite EUROSTAT, DG TAXUD, and IBDF. During this workshop, “The 4-5 tiers of tax gaps” theory conceived by Richard Murphy was presented and different ways in which his model could be implemented were illustrated. The question of how institutions such as the above mentioned ones could contribute in tackling the problem of tax gaps, and accordingly operationalize this tax gaps theory, was raised. Among other presentations, EUROSTAT shed some light on the portion of GDP that the illicit economy occupies, DG TAXUS provided an insight on the VAT tax gap, and IBDF suggested some potential approaches to measure tax gaps. After two days dedicated to the topic of tax gaps and its implications for COFFERS, Brigitte Unger and Richard Murphy gave a glimpse on what the next steps concerning this compelling issue are, and we will hopefully be able to know more about it soon.

Seminar hosted by Leyla Ates and Burçak Yalçin

Leyla Ates and Burçak Bal Yalçin organized a seminar on the “International Automatic Exchange of Information in Tax Matters in collaboration with the Turkish Capital Markets Association (TCMA) on February 26, 2019. The TCMA is a professional organisation with public institution status that consists of 223 resident and non-resident members of financial institutions. The seminar focused on impediments to Turkish tax administrative cooperation with EU Member States. These have led to Turkey’s current position on the EU ‘grey list’ of non-cooperative tax jurisdictions and among the EU’s Top 15 Financial Secrecy Providers, according to a recent COFFERS study.

COFFERS Researchers Enter OECD Debate on Digital Taxation

On March 6th, the Organisation for Economic Co-operation and Development (OECD) welcomed stakeholder inputs on key questions regarding the substance and design of these future policies, set to shape the global tax regime for years to come. In response, a group of academic political scientists, including several COFFERS researchers, sent a comment letter to the OECD. The comment letter draws on the researchers’ work and the political science literature more broadly to sketch out critical considerations for the international community in meeting the tax challenges of digitalization.

The comment letter can be read in full here.

COFFERS Researchers Intervene in Debate on Corporate Tax Reform – Murphy, Seabrooke and Wigan among signatories in letter to Financial Times

Reform would be little more than additional VAT

© Charlie Bibby/FT

Martin Wolf is right that the world’s corporation tax systems need major reform (“The world needs to change the way it taxes companies”, Opinion, March 7). He is entirely incorrect about the required solution.

Corporation tax has three purposes. One is to protect the income tax base from attack. The second is to tax capital, which by and large it does, making it a rare tax as a result. And third, it is a tax that should be used to apportion taxable benefits to those locations where value is added in the global supply chains that benefit us all.

Mr Wolf misses all these points and proposes a destination-based cash flow tax. This, in effect, is nothing more than an additional VAT in those places with the biggest consumer markets in the world. The consequence is that it will be regressive within a state as the incidence will be highest on those with lowest income, since the tax will be easy to pass on to consumers. It will reapportion taxable income from the world’s poorer regions and states to the richest ones of all. It will, as a result, increase global inequality when the precise opposite is needed.

There is a basis available for global international tax reform. It is to apportion the global profits of companies to states on the basis of where their sales, employment and assets are located. This would deliver global tax justice and coincidentally achieve the other objectives of an effective corporation tax. This is the required direction in which reform must take place.

Professor Richard Murphy,City, University of London

Professor Leonard Seabrooke,Copenhagen Business School

John Christensen,Chair, Tax Justice Network

Professor Prem Sikka,Professor Emeritus, University of Essex

Professor Sol Picciotto,Professor Emeritus, Lancaster University

Professor Andrew Baker,Sheffield University

Paul Monaghan,Director, The Fair Tax Mark

Dr Duncan Wigan,Copenhagen Business School

Nicholas Shaxson,Author, “Treasure Islands”

Robert Palmer,Director, Tax Justice UK

Richard Murphy has just published a complementary blog which suggests several key considerations that must be part of any reform of corporate tax. Read it here.

COFFERS at OECD/EUI High Level Policy Seminar

Thomas Rixen participated in a High Level Policy Seminar on “Taxation Governance in Global Markets: Challenges, Risks and Opportunities” that took place at the OECD on February 18 and 19, 2019 and was organized by Pascal Saint-Amans (Director, OECD, Center of Tax Policy and Administration), Jean Pisani-Ferry and George Papaconstantinou (both European University Institute, Florence)