Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Sunday, April 17, 2016

EU regulators demand greater tax transparency from multinationals

Tax avoidance by multinational corporations will be forced into the open under proposals to be unveiled by European regulators on Tuesday following the Panama Papers revelations.

The European commission will put forward legislation requiring large multinationals operating in Europe to disclose profits earned and taxes paid in each of the EU’s 28 member states, as well as fiscal havens.

All large companies trading in Europe, including subsidiaries of non-European businesses, would have to publish how much tax they pay outside the EU, including detailed country-by-country information on their finances in tax havens.

The commission was already working on measures to force international companies to disclose their earnings and tax bills in the EU. Following the leak of 11.5m files exposing the tax secrets of the global elite, officials have toughened up their plans to include tax havens.

Lord Hill, the European commissioner in charge of financial services, confirmed on Monday that the proposals were being extended to tax havens, in response to the public outcry over the revelations in the Panama papers.

The massive data leak had “shifted the public mood” and it was sensible to reflect that in the proposals, he told the Guardian and two other European newspapers in an interview.

Finding the right balance on draft legislation “is to do with what is the political and public mood, how much appetite is there for people to be prepared to make changes,” he said. “The revelations have shifted that bit of the balance.”

The original proposals were drawn up after public outcry over large corporations, such as Apple and Starbucks, paying little tax despite earning healthy profits. The EU loses up to €70bn (£56bn) a year through corporate tax avoidance, according to the European parliament.

Under the plans all multinational companies with a turnover greater than €750m would be obliged to meet tougher standards on public disclosure.

Hill, who was appointed by David Cameron as the UK’s EU commissioner, said that his proposals would help rebuild trust in business. “There is a sort of anti-business mood afoot, which I don’t think is healthy because you need to have a strong business sector, which is creating jobs and playing for public services. If you get something like this right it should help in that process.”

He said it was hard to justify to small- and medium-sized companies “why they should be paying at a higher effective tax rate”.

The proposals, which are expected to be published at 2pm BST, still have to be agreed by a qualified majority of EU finance ministers and the European parliament before they can enter into force.

One pitfall is that the EU does not have an official list of tax havens, although commission officials have promised that one will be ready within six months. A list of 30 “non-co-operative tax jurisdictions” that included Panama and the British Virgin Islands was published by the commission last year, but later withdrawn after it was rubbished by some member states. The British government does not have a list of tax havens and had criticised the list as unhelpful.

Officials in Brussels are counting on public outrage generated by the Panama papers to help reach a speedy agreement on the proposals, as well as an EU blacklist of tax havens. Pierre Moscovici, the European commissioner in charge of tax policy, has insisted that no government can now waver on these measures. “After the Panama Papers, there must not be a single hesitation from anybody, that we need country-by-country reporting,” he said.

Ahead of the release of the proposals, transparency campaigners warned they may not go far enough.

“As long as the proposal doesn’t cover all countries, multinational corporations will still have plenty of opportunities to hide their profits, said Tove Maria Ryding, tax justice coordinator at the European Network on Debt and Development. “So instead of solving the problem, this proposal would be moving the problem from one country to another, with multinationals still able to avoid taxes.”

Business groups are also unhappy with plans to compel companies to disclose their profits to the public and not just the tax authorities.

Business Europe, the pan-European employers’ association, “is heavily opposed to [public] country by country reporting”, its director general, Markus Beyrer, has said. The group is ready to disclose country-by-country data to tax inspectors, but rejects wider scrutiny. “The idea to introduce public pressure on this issue is simply the wrong one,” Beyrer said. “This will undermine the role of the tax authorities who should deal with this issue.”

Hill rejected the arguments that his proposals were anti-competitive and bad for business.

“People will need to be prepared to explain or justify the arrangements they have made and I think that is helpful,” he said. “You are better off with a simpler system that people can understand. More complex systems lead to a greater amount of arbitrage. [Transparency] helps you identify where there might be questions and open up that debate.”

Original Article
Source: theguardian.com/
Author:  Jennifer Rankinand, Sean Farrell

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