Tax justice, the new Washington consensus?

Coffers’ researcher Alex Cobham from Tax Justice Network recently spoke at an event entitled ‘Technical challenges and solutions for taxing wealth in developing countries’ at the World Bank/International Monetary Fund annual meetings on 15th October 2017. Is a new Washington Consensus emerging to replace the old one, which arguably has contributed to growing economic inequalities?

The main criticisms of the IMF have centred on its leading role in promoting a ‘tax consensus‘ that not only lacks a sound economic rationale, but that has demonstrably damaged the benefits of tax for many lower-income countries. The approach, in simple terms, has emphasised indirect taxes at the expense of direct taxes; VAT over trade taxes; set a low revenue ambition, and left redistribution to be done through (limited) expenditure. More than ten years ago, the Fund’s own Fiscal Affairs Department – and Michael Keen in particular, now the department’s deputy director – published research showing how the introduction of VAT on this basis failed to replace crucial revenues for lower income countries. Equity, too, has long been an element of the Fund’s thinking. But for many years the organisation’s country advice, where policy decisions are influenced, continued to bang the same drum.

read more here: https://www.taxjustice.net/2017/10/19/tax-justice-new-washington-consensus/

Utrecht University organizes a COFFERS-panel in Oslo

On September 7, 2017, Dr. Joras Ferwerda (Utrecht University) chaired a COFFERS-themed panel at the ECPR conference called ‘Fighting Tax Avoidance and Tax Crimes in the European Union’. Other COFFERS-participants were Miroslav Palansky (Charles University Prague), Lukas Hakelberg (University of Bamberg) and Ruth Lynch  and Martin Joseph Laheen (both University of Limerick). Each of the four attending COFFERS-partners presented relevant ongoing research on tax evasion. The panel was open to all participants of the ECPR conference and was well attended. Dr. Ainsley Elbra (University of Sydney) acted as outside discussant to give the COFFERS-members feedback from outside the consortium. The ECPR (European Consortium for Political Research) General Conference is the main academic event for political scientists in Europe.

Link to the ‘COFFERS-themed panel’: https://ecpr.eu/Events/PanelDetails.aspx?PanelID=7150&EventID=96

 

                                       Picture: Miroslav Palansky presenting with Lukas Hakelberg also in the frame.

 

Presentation at IIPF 2017

Petr Janský of Charles University took part in the 73rd Annual Congress of the International Institute of Public Finance (IIPF 2017), held in Tokyo, on August 18-20, 2017. He made two presentations at the congress. In one presentation titled “Estimating the Scale of Profit Shifting and Tax Revenue Losses Related to Foreign Direct Investment”, he presented some recent findings from research with his COFFERS colleague Miroslav Palanský on the tax revenue losses due to tax havens, as well as some other research on the scale of profit shifting. In the other presentation titled “Country-by-Country Reporting Data and Locations of European Banks: Profits Shifted to Tax Havens, Turnover and Employees Elsewhere?”, he presented some preliminary results for banks and profit shifting and discussed the usefulness of the recently published country-by-country reporting data.

 

Miroslav Palanský from Charles University presented at the conference Public economics for development

Miroslav Palanský from Charles University participated and presented in the conference Public economics for development organized by UNU-WIDER on July 5-6 in Maputo, Mozambique, where he presented recent findings of his joint research with another COFFERS researcher, Petr Janský. The aim of his talk was to present the foreign direct investment-approach to the quantification of corporate profit shifting and some preliminary estimates stemming from the application of that approach to IMF’s global direct investment data, which suggest that developing countries are the ones hurt most by corporate profit shifting practices.

Link to the conference can be found here

 

 

COFFERS researchers Richard Murphy and Saila Stausholm publish report on the Big Four.

The GUE/NGL group in the EU parliament published a report July 5th 2017 by Saila Stausholm of Copenhagen Business School and Richard Murphy of City, University London, entitled ‘The Big Four: a study in opacity’. The report is the first of its kind investigating the structure of the Big Four firms, and finds that while it is difficult to establish precisely how many offices and staff each of the Big Four firms have in each country due to their secrecy, it is clear is that the size of their operations in a jurisdiction is not always proportional to its population or GDP. For example, the Big Four have more staff in Luxembourg in proportion to the size of the local population than in any other country; the Cayman Islands come second in this ranking and Bermuda third, indicating that they are heavily overrepresented in tax havens.

The ownership structure of the Big Four, in which they are legally independent networks despite their global brand and central management organizations, further reduces their regulatory cost and risk by providing a ring-fencing mechanism between their presence in tax havens and elsewhere.

Together, these findings suggests that providing professional services directly related to the secrecy jurisdictions are a big part of the business model for the Big Four. The report suggests ways to increase transparency of these firms and commit them to separate auditing services and tax advice.

The report has attracted the attention of several European newspapers.

 

Link to the rapport can be found here

Link to artikler can be found below:

Bloomberg BNA

Süddeutsche Zeitung

 

Scale of Profit Shifting and Country-by-Country Reporting

On 5 June 2017 Petr Janský of Charles University took part in the Tax Justice Annual Conference, an annual conference of Tax Justice Network at City, University of London. In his presentation titled “Scale of Profit Shifting and Country-by-Country Reporting”, he presented some recent findings from research with his COFFERS colleague Miroslav Palanský on the tax revenue losses due to tax havens, as well as some other research on the scale of profit shifting and the usefulness of the recently published banks’ country-by-country reporting data.

For more information please contact Petr Janský

Participation by Petr Janský in workshop on International corporate tax avoidance

On 16 May 2017 Petr Janský took part in an annual workshop in Prague on tax havens for academic and private-sector experts as well as public officials (see http://danoveraje.pef.czu.cz/, in Czech, for details).

In his presentation titled “International corporate tax avoidance” he presented some research carried out within the COFFERS project as well as some earlier research findings relating to the scale of tax havens’ impact. A section of his talk presented a draft of a paper called “Estimating the scale of corporate profit shifting: Tax revenue losses related to foreign direct investment” written jointly with another COFFERS team member, Miroslav Palanský. The paper uses bilateral foreign direct investment data to estimate, at country level, tax revenue losses that result from some corporate profit shifting practices.

 

University of Limerick by Sheila Killian present COFFERS on Irish news

The work of the University of Limerick team on Work package 5 of COFFERS was covered extensively on Irish national and local media in April 2017.

An interview with WP leader Sheila Killian was covered in the main business segment of Morning Ireland, on RTE Radio One, the main radio station of Ireland’s national broadcaster, and in the Irish Times.

Similar interviews were also included in local Limerick press (The Limerick Leader and Limerick Live95FM)

Link for the Irish Times can be found here

And link for Morning Ireland can be found here

 

CBS/COFFERS PhD fellow Saila Stausholm presented at the IMF

CBS/COFFERS PhD fellow Saila Stausholm went to the IMF in Washington, D.C. to give a presentation about her paper on tax incentives, entitled “Give us a break: the impact of tax holidays on developing countries”. Her research looks at the phenomenon of tax holidays and its effect on developing countries in terms of economic and social outcomes. In the presentation she showed how new data documents a recent increase in the use of tax holidays throughout all four regions surveyed: Latin America, Asia, Africa and the Caribbean. She presented her finding that the effect of tax holidays on FDI is negligible and decreasing, and importantly, that the attracted FDI does not translate into neither real capital accumulation nor economic growth. Her research shows that tax holidays are negatively correlated with tax revenues, and as revenues go down, spending on education decreases. This indicates that there is a race to the bottom when it comes to tax incentives and the competition for investment, which may act as a transfer mechanism from the poor to the pockets of corporations.

The animated map shows how the use of tax holidays changes over the course of the period surveyed – red indicating that the country offers a tax holiday, and green that they do not (white that they are not in the sample). There is a lot of variation over time and across regions, however, over the last 5 years the use of tax holidays has been increasing in all parts of the developing world.