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Ten years in the campaign for tax justice - we have a long way to go

For more than a decade John Christensen has been at the forefront of the challenge to offshore finance, tax avoidance and evasion and the criminal immunity safeguarded by secrecy jurisdictions. Where's it heading?

Monaco harbour. Flickr/nanand81, CC BY-NC 2.0

On a wall of my office in Chesham hangs a cartoon of Don Quixote that I bought from a street vendor in Moscow in the dying days of the Soviet Union. It serves as a reminder of the pitfalls of tilting against windmills like the OECD or the IMF.  Through Tax Justice Network’s (TJN) early years there was a shared feeling that we were engaged in a valiant but hopeless struggle against the most powerful people on the planet and the all-pervading ideology of financialised liberalism that backed their interests. But the banking crisis that emerged in 2007 marked a turning point, beyond which TJN’s mission seemed less quixotic – though more urgent.

The banking bailouts of 2008 and the subsequent collapse of public finances in many countries had various roots, but a major factor was the rising share of global income going to the 1 percent and the falling contribution they made to government revenues. Another, less obvious underlying cause of the crisis was the role of tax havens – and particularly the archipelago of British islands linked to the City of London – in fostering lax financial regulation and the aggressive, race-to-the-bottom deregulatory dynamics that prevent effective oversight of the shadow banking system. The so-called shadow banking system is cast by onshore banks onto their countless offshore subsidiaries and affiliates.

In November 2007 the Guardian newspaper, following consultation with TJN, published a lengthy exposé of how banana trading companies use offshore subsidiaries to shift profits to tax havens. The article attracted interest across the world, and was followed shortly afterwards by Christian Aid’s seminal report ‘Death and Taxes’ which adopted a hard-hitting approach to show how corporate tax avoidance literally causes deaths in poorer countries. When asked to pinpoint a tipping point moment in TJN’s development I highlight that Guardian article and Christian Aid’s report as major steps.

TJN’s position was further boosted in 2009, when Richard Murphy was invited to blog live from within the G20 summit hall in London as finance ministers and heads of state discussed measures to tackle offshore secrecy. The publication in 2011 of Treasure Islands, Nick Shaxson’s brilliant exposé of tax havenry, also played a big role in explaining to the public and to opinion-formers why tax havens are a core rather than peripheral issue. A prominent pro-tax haven lawyer based in London subsequently told me that Treasure Islands was so well-researched and compelling in its arguments, that attempts at counter-argument were doomed.

From 2009 onwards it was clear that tax justice was rising up the political agenda. Public opinion was stacked in our favour in many countries: crisis-hit governments were scrambling for revenues, and inequality was seriously harming any prospects for a sustained recovery. The beggar-thy-neighbour practices of countries like Ireland and the UK need to be recognised for what they are: economic warfare. Tax wars is a far more accurate term for this phenomenon.

Global media coverage of tax havens and tax cheating was rising steadily. It skyrocketed in 2012 when we published Jim Henry’s estimate that up to $32 trillion of private wealth was stashed offshore. Reacting to public anger, G20 leaders were now regularly talking about the need for measures against tax havens. And the tiny team at TJN – just four staffers at that time – was swamped by enquiries from journalists, general public, and NGOs around the world. Nick Shaxson jokes about this deluge of demands as being like drinking water from a fire hose, but joking aside we urgently needed to reorganise the global network to separate TJN’s core research and communications activities from the hustle and bustle of campaign and advocacy work. Brilliant new research ideas were being discarded daily because we lacked capacity and, with steam coming out of our noses, the pressure just kept building.

We finally succeeded in launching the Global Alliance for Tax Justice in 2013 to take on all the tasks related to coordinating regional and global advocacy and campaigns.  This has allowed TJN more time and space to widen its thematic coverage. For now, we have selected two themes that we feel should become core tax justice themes in the coming years. Firstly, confronting the rise of the politics of ‘competition’ between states leading to the lemming-like race-to-the-bottom on taxing capital. The beggar-thy-neighbour practices of countries like Ireland and the UK need to be recognised for what they are: economic warfare. Tax wars is a far more accurate term for this phenomenon. Secondly, making links between tax justice and human rights is a no-brainer when you stop to think about it, but much of the human rights community has been studiously looking the other way for decades.

Human rights activists rightly demand that states fulfill obligations relating to security, education, health and other services. They now need to start paying attention to where the money comes from. Equally, they need to be more critical of corporate claims about being human rights ‘compliant’ when companies are purposefully setting up complex offshore structures to avoid paying taxes where they’re due. As the UN’s special rapporteur on extreme poverty, Magdelena Sepúlveda, wrote in a special edition of Tax Justice Focus in June 2014, when governments choose to cut crucial services to poor people in the name of austerity, more often than not they are making a choice between raising the tax contribution of rich people and corporations, or imposing cuts on the poorest and most vulnerable people. In Sepúlveda’s own words:

In nearly every country of the world it is not a question of lack of resources, but rather of a lack of political will to collect and marshal these resources in a manner that is compliant with human rights.

In 2014 TJN’s team, led by Liz Nelson, partnered up with the Center for Economic and Social Rights in New York to collaborate on a programme to put tax justice at the heart of the human rights community. Reframing human rights in this way will hopefully bring a new focus to the human rights agenda, drawing attention to how tax havens deliberately deprive other countries of the resources they need to fulfill their human rights obligations, and investigating how powerful banks and accounting firms assist clients with dodging taxes while claiming to be human rights compliant.

Given more resources we’d love to go further. The austerity measures imposed across the world have impacted more heavily on women than on men, partly because the fiscal cutbacks have hit benefits to carers and single mothers. The gender dimensions of tax injustices need far more research to highlight how different tax regimes discriminate against women. We’d also love to collaborate in research and campaigning on tax and the environment: everyone knows how the energy market, for example, is rigged in favour of the hydrocarbon industry, with billions of dollars of subsidies supporting the big oil companies – far outstripping the subsidies paid to the renewables sector. All these issues need to be brought to the surface and turned into effective campaigns. We still have our work cut out: back to that firehouse!

 

John Christensen is the executive director of the Tax Justice Network. This is an edited extract from his foreword to The Greatest Invention: Tax and the Campaign for a Just Society, published by Commonwealth in the UK today. It can be bought direct from the publisher at http://commonwealth-publishing.com/shop/the-greatest-invention/

About the author

John Christensen is the former economic adviser to the British Crown Dependency of Jersey, a pre-eminent British tax haven. Having originally trained as a forensic fraud investigator, he is now the director of the Tax Justice Network, a member of the OECD Task Force on Tax and Development, and a board member of Washington, D.C.-based New Rules for Global Finance.


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