Group of renowned economists are urging G20 countries to use the sanctions against Ukraine’s oligarchs as a driving force to finally end tax havens.
There was an open letter sent to the 20 finance ministers in advance of their Tuesday meeting calling on them to implement a global register to link assets as well as companies and structures to their owners in order to stop nations from not being paid back what they owe.
An anti-tax-avoidance group known as ICRICT, which includes economists Gabriel Zucman, Joseph Stiglitz, and Thomas Piketty, as well as the French investigative judge Eva Joly are among its 14 signatories.
Tax havens are increasing inequality and eroding the wealth of the poorest people in society, they claimed, and they called for an international financial system that was “skewed in favour of wealthy tax abusers” to be reformed.
However, despite this, the ICRICT commissioners found that the wealth gap between rich and poor had only grown wider during the pandemic’s first year, which was made worse by the conflict in Ukraine and left many of the poorest people facing an increase in their daily living expenses and skyrocketing food and energy prices.
To avoid paying taxes and to hide money generated by corruption and illegal activities… members of the global elite often hide their wealth through elaborate structures.” Tax evasion, corruption, and money laundering are all made easier thanks to the global financial system.
Many countries have found it difficult to impose sanctions on those with ties to the Russian government after Vladimir Putin’s invasion revealed what the signatories called a “wall of opacity” over the location of the wealth of Russian oligarchs.
“The war in Ukraine shows that we need to tackle tax havens head-on now, by implementing transparency measures as a matter of urgency,” the letter read. There are many oligarchs to be targeted, as well as any and all forms of wealth that can be hidden from tax authorities or the general public and hidden in jurisdictions with high levels of financial opacity.”
For example, the group claims that the automatic exchange of financial account information and the introduction of national registries of beneficial ownership have made some progress in tying wealth to its true owners in the last few years. However, they argued that previous efforts had been lacking in “political will,” prompting them to call on the G20 nations to do more.
The Panama Papers, the Paradise Papers, and most recently the Suisse Secrets leaks have exposed the activities of wealthy individuals and companies, and their use of offshore tax havens, in the wake of these leaks. Activists, however, say little progress has been made in the fight against their use, despite the growing pressure on governments to take stronger action on tax.
The economists at ICRICT proposed the creation of a global network of asset registries that would keep track of all types of wealth, including tangibles like real estate, yachts, jets, and jewellery, as well as intangibles like bank accounts, cryptocurrency, and safe deposit boxes.
In some cases, the beneficial owners of these assets are distinct from the legal owners. Countries could better track and analyse wealth and inequality, as well as more effectively enforce tax laws, if a global asset registry was established that detailed what was owned where, by whom, and for how long, the economists said.
G20 leaders are urged to convene an urgent international summit to implement such a system and discuss offshore wealth and tax havens, according to the commissioners. “No more excuses, no more pandemics, no more wars to justify lack of action,” they sign off, concluding that such action was required “to preserve democracy, end spiralling inequality and rebuild the social contract”.
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