Zero tol­er­ance needed against tax se­crecy, says for­mer Pana­ma­nian govern­ment ad­viser

Malta Independent - - NEWS -

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.

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