By David Pegg
Oxfam International director says tax avoidance keeps people in poverty around the world
Global cooperation is needed to reform the international corporation tax system in the aftermath of the Paradise Papers, panelists at a World Economic Forum debate on tax avoidance have said.
Winnie Byanyima, the executive director of Oxfam International, said international tax avoidance was an affront to human rights. “It’s about people who don’t have access to the services they need to lift themselves out of poverty because of tax avoidance,” she said.
She called for a shift towards public transparency around corporate tax affairs as part of the solution and dismissed the suggestion that corporations were entitled to keep their tax affairs private.
“We are in a system where greed is good,” she said. “Companies are encouraged to maximise for their shareholders and that is why they avoid tax and slash wages.”
She called for a global agreement on tax cooperation to be forged at the UN, arguing that the OECD, which overseas agreements between wealthy countries, could not be trusted to fully consider the needs of developing economies.
The Irish finance minister, Paschal Donohoe, insisted that Ireland was not a tax haven following allegations by the European commission that it had helped Apple reduce its effective tax rate to 0.005%.
The Paradise Papers revealed how Apple had relocated to Jersey after international criticism of its use of Ireland to lower its tax rate. It is thought to have accrued more than $250bn tax-free offshore.
The Nobel prize-winning economist Joseph Stiglitz agreed with the suggestion that the OECD was unable to represent developing nations in tax discussions. “The problem is it’s trying to fix a broken system by the guys who are making a profit out of the broken system,” he said.
He said the Panama Papers and Paradise Papers investigations had exposed the problem of people hiding assets illicitly. “But there’s a problem of a global tax system that allows people legally to avoid paying taxes and leads to a global race to the bottom [in corporate tax policy].”
Pierre Moscovici, the EU commissioner for economic and financial affairs, acknowledged calls for the bloc to lead global efforts to force multinationals to pay a fair rate of tax, as Stiglitz criticised the US president, Donald Trump, as “the tax avoider-in-chief”.
“The EU wants to be the champion. The EU wants to be the leader,” Moscovici said. He said he understood criticism of a recent decision to remove countries including Panama and Dubai from a blacklist of tax havens drawn up by the EU after the Paradise Papers revelations in exchange for a commitment to improve.
He also acknowledged complaints that the EU currently lacked enforcement mechanisms and needed strengthening. “A list without sanctions is not credible,” he conceded.