Joseph Stiglitz calls for "global attack" on tax evasion

Joseph Stiglitz, a Nobel laureate for economics, has called for a "global attack" on tax avoidance and tax evasion.

Joseph Stiglitz | Photo credit: European Parliament audiovisual

By Martin Banks

16 Nov 2016


He told a meeting in Parliament on Wednesday that he supports "zero tolerance" for the type of "secrecy" highlighted by the Panama Papers scandal.

The Panama Papers are 11.5 million leaked documents that detail financial and attorney–client information for more than 214,488 offshore entities.

The documents are said to show the myriad ways in which the rich can exploit secretive offshore tax regimes. Twelve national leaders, including Russian President Vladimir Putin, were among 143 politicians, their families and close associates from around the world known to have been using offshore tax havens.


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Addressing Parliament's special inquiry committee into the scandal, he also threw his weight behind calls for greater legal protection for whistle blowers.

Stiglitz has co-authored a report on the issue with Swiss anti-corruption lawyer Mark Pieth.

It follows the pair's resignation from a commission set up to investigate the Panama Papers scandal, citing a lack of commitment from the Panama government to undergo "meaningful reforms and transparency after the revelations."

Stiglitz was invited to take part in an exchange of views with members of Parliament's committee of inquiry into money laundering, tax avoidance and tax evasion (PANA) on tax justice and international transparency.

He told the packed hearing, "There has to be a global attack on the type of secrecy and lack of transparency that led to this scandal happening.

"We will never get perfect transparency but the worst aspects of the activities exposed by the Panama Papers scandal have to be shut down."

He added, "It will not be easy, but this is a war we can win."

One important element of this, he argued, will be better protection for whistle blowers.

He said, "In some countries, people who blow the whistle on wrong doing can actually be sent to prison. They have legislation which is designed to penalise whistle blowers. 

"What is needed is a blacklist of countries that do such things."

He was invited to Parliament by the GUE/NGL group. 

Group member Fabio De Masi, a Vice-Chair of the committee, said, "Stiglitz basically confirmed all the elements of a fairer tax system that we have long called for: starting with zero tolerance for secrecy through comprehensive and public registers for the beneficial owners of companies and trusts, as well as a fully-fledged country by country reporting.

"When battling money-laundering and tax crime, we need a strong focus on the enforcement of rules: from penalties such as licence withdrawal for banks and law firms to source taxes and restrictions on financial market access for jurisdictions that refuse to reform.

"This has to include sub-federal entities like Delaware and Nevada in the US - as Stiglitz has explicitly confirmed," said De Masi.

“There also needs to be a global end to tax competition as amply demonstrated by ICRICT. The setting of tax rates has become a race to the bottom and leaves the other 99 per cent to bear the brunt. 

"As long as multiple EU member states continue to oppose closer co-operation, we'd need unilateral protective action via source taxes on profit transfers.

"Without tax justice, there is no end to this disastrous austerity regime in the EU. Without an end to austerity, there is no future for the EU," he said.

 

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