Zero tolerance needed against tax secrecy, says former Panamanian government adviser
Former Panamanian government advisor Joseph Stiglitz told the EU Parliamentary Committee looking into money laundering, tax avoidance and tax evasion (Pana) that secrecy in tax affairs should be treated like a disease which needs to be isolated.
There needs to be a “comprehensive global approach” against secret tax structures, the Nobel Prize-winning economist said.
“Tax secrecy is the darker side of globalisation,” said Stiglitz, adding that the hiding of money undermined the functioning of global society. “So there has to be, basically, a comprehensive global approach with essentially zero tolerance for secrecy.”
He described as “absolutely critical” the creation of publically searchable registries of the owners of corporations who ultimately benefit .
“The reason it has to be searchable is because it has to be possible not only for law enforcement agencies, but also the media to find out who is doing what activities,” he said.
Stiglitz resigned in August from the inquiry panel set up by the Panamanian government after the leak of the Panama Papers, after the authorities refused to guarantee publication of his final report.
Introducing Professor Stiglitz, Werner Langen (EPP, DE) Chairman of the Panama Committee, said the common goal of all EU member states was to end “the obscure practices of companies who are selling secrecy. The most effective tool we have at hand is transparency”.
The former advisor backed the suggestion by Jeppe Kofod (S&D, DK) that there should be stronger sanctions against the “enablers” of tax avoidance, evasion and money laundering, such as law firms, advisors and wealth managers. Countries that refuse to comply with “transparency norms” should be cut off, he suggested, including prohibiting non-compliant companies from doing business with firms from compliant countries.
Stiglitz likened companies which refused to comply with “global norms” to carriers of disease. He said the EU could adopt an approach such as “you have a contagious disease and we won’t allow our corporations to interact with you”.
ALDE MEP Petr Jezek raised concerns about enforcing transparency rules not only against small off-shore jurisdictions, but also “on-shore jurisdictions” in major economies, like the UK and the US. Stiglitz pointed out that most tax evasion and avoidance took place outside of Panama.