Okay, tax is not the sexiest subject ever. But I learned some pretty worrisome stuff at the OECD (Organization for Economic Co-operation and Development) press conference at the G20 media centre.
With 31 member countries, the OECD is the main group charged by the G20 with working towards “a fairer world where there will be no more safe havens for tax evaders.” And they report that the political push to their cause that came from Pittsburgh last fall, has amped up the drive toward transparency.
I guess that’s the good news.
But the shocker is, they also revealed that the financial crisis has created approximately $800 billion (could be much more) in tax losses for the financial sector and the OECD has no idea how these will be written off.
To us in the tax laity, that means that international finance may not only benefit from the tax payer support they have received to date, but they may also be able to evade paying taxes going forward for years to come because of the losses sitting on their books! In some countries, it was noted, tax rules could mean that they can apply these losses to taxes already paid and end up receiving government cheques at tax time as a result.
And OECD research does affirm that while the sector is subject to regular corporate, property and other taxes, their effective tax rate (ie what they actually pay) is lower than the rest of the corporate sector due to “aggressive tax planning.” That means they spend a lot of time and money figuring out ways they can avoid the taxman that are too complicated and sneaky for us or government tax administrators to figure out.
It is kind of terrifying to think about what $800 billion in lost tax revenues will cost the world in health care and education due to resulting government spending cuts. It sure makes the Financial Transaction Tax all the more pressing. Ouch.[rssbreak]
