States are like people. At least, sometimes they do have the same survival instincts, especially when it comes to money. I mean, what would you do if you’re short on money but still craving a refreshing beer? You desperately rake up your pockets. And if you still can’t find any, then you go rake the neighbour’s. At least, that’s what I would do.
Let’s leave the metaphor there. It seems like today, due to economic hard times, states are struggling to afford that goddamned beer. Leading the European Council to gather in Brussels two days ago, with the firm intention to scrape some money together. Here to understand: tackling once for all tax evasion, and putting an end to the reign of tax havens and bank secrecies. (As I said, if you can’t find coins in your own pockets, go for the neighbours’).
Never Ending Negotiations
According to published numbers, the deficit caused by tax dodgers in the Union turns around € 1 trillion a year. And there is more. 21 tax havens (out of a 50-list) are in fact EU-related jurisdictions. Those were quite acceptable reasons for leaders to re-establish order down there. But the problem with the EU is that it’s still gonna have to overcome internal divergences, before the dreams come true.
Sadly enough, not every member is on the same page when it comes to fighting tax evasion, and some resist. Countries like Austria or Luxembourg (but also third countries like Switzerland, Monaco, Liechtenstein, Andorra and so on) have a clear tendency to crawl along and show no hurry in giving up their bank secrecies. Whats more, to avoid competition, they became masters in some kind of “pass-the-bucks” policy. Meaning, the first two will not concretely make a move towards a European automatic exchange of data before the rest stop offering low imposition rates and bank secrecy to attract the big fortunes of this world.
So yeah, the last summit didn’t quite reach a happy ending. And despite the mention of brilliant catchphrases, like Holland claiming that “tax evaders should realize that the days of impunity are now over”, the problem will be postponed to the end of the year, the ultimate deadline to pressure the reluctant. Like it or not, but the whole negotiations process makes me giggle a lil bit.
A Global Concern?
The issue of tax evasion is not a prerogative of the EU only. According to OXFAM, $18.5 trillion (18.500’000’000’000, don’t thank me for that) are hidden worldwide, undeclared and untaxed by wealthy guys. Out of this amount, $156 billion are escaping tax authorities – a number that solely concerns individuals, not companies. The report goes on by saying that this would be “twice the money required for every person in the world to live above the $1.25-a-day poverty threshold”. This is where I stop giggling.
But it also makes me wonder. Is that fighting against tax havens really a global one? The US were the first to shoot by implementing recently Fatca – basically a law constraining foreign banks to pay back the money stemming from American citizens’ accounts. In case they wouldn’t, they risk heavy taxes or restrained access to American market. Arguments strong enough. The G8 and G20 – pushed by the UK and Cameron – seem also up for establishing global standards. Nevertheless, the question of how and when these regulations might be applied to the totality of the world remains for the moment unanswered. And if the EU and the US seem decided to put their hands back on their taxpayers’ money, nothing suggests that the rest of the world will jump on the bandwagon, get a share, or that the entirety of the tax havens (UK and US numerous related jurisdictions included) will soon close their doors.
On the contrary, the future might well reserve two-speed negotiations, where influence, hypocrisy and case-by-case settlements, much more than justice, will determine the money you’ll get back. But that those ongoing negotiations will contribute to the built of a fair transparent world, the disappearance of tax dodging and help developing countries to retrieve capital flight – that I strongly doubt.