Taxing times for the real indoor pirates?

May 9th, 2009

The Guardian’s Tax Gap series has highlighted the injustice of companies making huge profits yet using complex accounting arrangements to avoid tax. The root of these problems is financial secrecy in some jurisdictions (usually tax havens), which allows companies to hide profits offshore and shift capital from where real economic activity is occurring to where the tax rates are low.

An international accounting standard that requires companies operating internationally to disclose where they operate, the profits they make and the taxes they pay would enable all countries, rich and poor, to identify where the tax dodgers are at work.

Writes David McNair Taxing times indeed for the real indoor pirates. Sadly however,

The announcement by the Obama administration that it is to clamp down on US companies and individuals dodging tax would seem at first glance to herald the dawn of a new capitalist age. Naked greed is out. From henceforth, mammon must walk hand in hand with morality.

Yet anyone believing that the measures proposed by the US will deliver benefits for all those who suffer at the hands of tax dodgers may yet be disappointed.

McNair sums up

If Obama is to draw a real line under the lack of regulation and lack of transparency that triggered the present crisis, he must champion a truly multilateral agreement on automatic exchange of tax information. That way he can be a friend to the poor as well as protecting America’s interests.

Indeed he must seek true cooperation always a difficult task when you play the prisoners dilemma. He must engage peoples sense that they are all working for the mutual benefit of all society – it has come to that.

We must co-create that future otherwise we leave it up to the indoor pirates.

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