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WHAT CAN BE DONE
GDP in 1999 to more than 1,000 percent in 2008, and in Luxembourg, they rose
from 19 to 208 percent over the same time span. 391
The richest individuals are able to take advantage of the same tax loopholes
and secrecy. In 2013 Oxfam estimated that the world lost approximately $156bn
in tax revenue as a result of wealthy individuals’ moving assets into offshore
tax havens. 392 This is not only a ‘rich-country’ illness. Wealthy Salvadorans, from
a country where 35 percent of the population lives in poverty, 393 are estimated
to hide $11.2bn in tax havens. 394
There is no way for governments to make sure that these global companies and
rich individuals are paying their fair share of taxes while tax havens are open
for business.
Why has there not been a tax revolution yet
Tax policy is prone to vested interests, particularly the disproportionate
influence of business lobbies and wealthy elites opposed to any form of more
progressive taxation at the national and global level. As early as 1998, the
OECD recognized that tax competition and the use of tax havens were harmful,
and expanding at an alarming rate. 395 But in the face of intense lobbying from
groups representing the interests of tax havens, from tax havens themselves,
and from rich country governments, the OECD’s attempts to coordinate action
on taxation had been largely abandoned by 2001. 396
International tax reform has come back to the top of the international agenda
since the 2008 financial crisis. There has been widespread public outrage
over a number of high-profile companies, including Apple 397 and Starbucks, 398
and others, that have been exposed for dodging their taxes and cheating the
system. In 2012, G20 governments commissioned the OECD again to propose
action to curb profit shifting and other tricks exploited by MNCs that erode
governments’ tax bases – leading to the current Base Erosion and Profit
Shifting (BEPS) process. If done correctly, BEPS could provide much-needed
coherence in the international tax architecture and could help to reduce
corporate tax dodging practices, to the benefit of rich and poor countries alike.
However, the process is in grave danger because it represents the interests
of rich countries and is open to undue influence from corporate and economic
elites. At the end of 2013, the OECD opened consultations to ‘stakeholders’ 399
to comment on a number of draft rules, including those on country-bycountry
reporting. Almost 87 percent of submissions on this issue came from
the business sector, and unsurprisingly they were almost all opposed to the
proposal. Overall, only five contributions came from developing countries,
with the remaining 130 from rich countries. 400
There are still strong vested interests that are standing in the way
of true reform.
THE HIGH ROAD: HOPE FOR A FAIRER FUTURE
Despite the shady network of tax havens and the strong resistance to reform,
there are signs of hope. Some countries are taking the high road and adopting
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