I thought this was an interesting read on the whole ‘free market vs. gov’t inteference’.
I personally believe that more regulations on multinationals may be no bad thing,but what say ye all?
Tax-dodging is new slavery - charity
May 14, 2008
The lives of more than 5 million children in developing countries could be saved if the super-rich and multinational firms paid their fair share in taxes, according to a leading British charity.
In Death and Taxes: the True Toll of Tax-dodging, Christian Aid says the extent of tax abuse “is so widespread and damaging that it is tantamount to a new slavery”.
The charity estimates that governments in the poorest countries are being cheated out of at least $160 billion (R1.2 trillion) a year in tax revenues, much more than the cost of the millennium development goals.
The World Bank estimates that between $40 billion and $60 billion a year is needed to achieve the UN goals, which aim to halve poverty by 2015, saving 350 000 children’s lives a year.
Christian Aid director Daleep Mukarji said: “We predict that illegal trade-related tax evasion alone will be responsible for the deaths of 5.6 million children under the age of five between 2000 and 2015. That’s almost 1 000 a day.”
Christian Aid believes that up to $11 trillion may be stashed away in tax havens.
The report notes the distinction between tax avoidance, which is legal, and tax evasion, which is not, but says avoidance is part of a “sliding scale of legitimacy”, in which ever more ingenious methods are used to get around the rules and shelter corporate profits.
A notable method is the use of tax havens, where extreme secrecy encourages a more general criminality.
It says: “There are only four reasons for banking ‘offshore’: to avoid tax, to evade tax, to function in secret [and] to sidestep regulations controlling financial services or monopolistic practices. In each scenario, the pursuit of profit outweighs all other considerations, including good citizenship and social responsibility.”
Tax havens have come under increasing scrutiny lately, as EU states and the Organisation for Economic Co-operation and Development have tried to crack down on them.
The German secret service recently paid an informant E4 million (R47 million) to reveal details of money held in Lichtenstein. The UK’s tax authority is hoping to recover Â£100 million (R1.5 billion) in lost revenue by similar means.
Christian Aid points out that the UK has a special responsibility, because so many havens are British overseas territories or crown dependencies. The list includes Jersey, Guernsey, the Isle of Man, the Cayman Islands, Bermuda and the British Virgin Islands.
Ironically, even CDC - formerly the Commonwealth Development Corporation, which is still owned by the UK’s department for international development - pays no taxes on its Â£350 million annual profit, thanks to its use of tax havens, even though its main aim is to fund development projects.
The charity criticises high-profile individuals for minimising their taxes, including race driver Lewis Hamilton and musicians Phil Collins and Bono.
The widespread use of holding companies in tax havens to hold profits, licences and intellectual property, all to reduce tax bills, is condemned.
“Every transnational corporation uses holding companies,” it says, listing BP, Wal-Mart Stores, Royal Dutch Shell, ExxonMobil and Ford Motor’s reinsurance group as benefiting from offshore holdings.
Christian Aid’s strongest words are reserved for the companies and accountancy firms that save billions by manipulating invoicing and cost structures to avoid paying taxes and royalties on mineral rights in developing economies.
Rather than protecting wealthy non-domiciled people by acquiescing in the tax haven system, Christian Aid calls on the governments of the UK and Ireland to “support international moves to curtail ï¿½?ï¿½ the secrecy of tax havens, thereby lifting the lid on the tax industry and its machinations”.