## Transparency and taxes - what we knew before #PanamaPapers

•  Filed under fiscal policy and taxation

The scale of the "missing wealth": "Gabriel Zucman estimated in his paper ‘The Missing Wealth of Nations’ (2013) that 8% of the global financial wealth of households is held in tax havens, three-quarters of which goes unreported in official statistics. In an interview, Zucman states that 8% is a global average which conceals significant heterogeneity: the U.S. has around 4% of its financial wealth offshore, Europe around 10%, but in Latin America this number is closer to 20%, in Africa to 30%, and in Russia the percentage is around 50%." (The implications of the Panama Papers | Bruegel)

Panama Papers: Key revelations so far - FT.com; April 6, 2016

Panama Papers Q&A: What is the scandal about? - BBC News: "Although there are legitimate ways of using tax havens, most of what has been going on is about hiding the true owners of money, the origin of the money and avoiding paying tax on the money. ... Some of the main allegations centre on the creation of shell companies, that have the outward appearance of being legitimate businesses, but are just empty shells. They do nothing but manage money, while hiding who owns it."

The EU's Anti Tax Avoidance Directive sets out six key anti-avoidance measures.

I would like to ... talk about two ingredients of taxation for successful 21st-century economies. The first one is the ability of countries to generate robust government revenue. This is, of course, the lifeblood of modern states. This is what allows governments to provide public goods that support strong and durable growth.

... The second ingredient of successful 21st-century economies is international taxation. This is an essential means by which governments mobilize their revenues in a globalized economy. ... we need a tax system in which ordinary citizens are convinced that multinational companies and wealthy individuals are contributing a fair share to the public purse, to the common good.

(In an earlier speech, Lagarde argued that "Economic policies need to pay attention to both prosperity and equity.")

## Earlier discourse

Other articles: Will multinationals pay more taxes where they do business?

Bloomberg Business: U.K.'s Osborne Says EU Should Move Toward Public Tax Disclosures

“We should be moving to more public country-by-country reporting,” Osborne said, during debate with European finance ministers in Brussels Friday. “This is something the U.K. will seek to promote internationally.”

The EU wants to make it harder for companies to exploit differences in national laws or park profits in a low-tax jurisdiction instead of paying taxes in the locales where the revenue gets generated. The 28-nation bloc also is tightening oversight of sweetheart tax deals for multinational firms, as reflected by tax probes involving Apple Inc., McDonalds Corp. and Starbucks Corp.

Google to Apple Could See Tax Loopholes Curbed in OECD Proposal - Bloomberg

So to complain of the OECD’s “sticking plaster” approach (as some lobby groups have) is to miss the point. Perhaps the best solution is a thorough overhaul of global tax, aimed at neutralising all possibility of harmful tax competition. But this was never on the cards. ... Seen in this light, BEPS does as useful a job as one might hope for. Of the 15 action points in its final report, the most unambiguously positive is an agreed template for country-by-country reporting. This will require that companies above a certain size report their revenues, profits, taxes and a host of other data for every jurisdiction in which they operate. Such disclosure should produce a comprehensive map of where activities take place and where tax is paid. Tackling the divergence between tax and economic value is what BEPS was set up for.

Fiscal blackmail | The Economist

People go to great lengths to avoid paying tax. One popular trick in the Middle Ages was to become a monk; these days, shell companies in the Caribbean are a more common retreat. The gap between what is owed and what is paid is nearly $400 billion a year in America, and about £40 billion ($70 billion) in Britain. To keep the shortfall in check, governments design taxes to be tough to weasel out of. The value-added tax, for instance, allows firms to deduct tax paid on inputs from their sales-tax bill, in effect encouraging them to police their suppliers. Then there are the sticks: audits and penalties. Promising new research in behavioural economics could give governments another tool for boosting payment: the psychological nudge.