Billions of people around the world are trapped in poverty due to systemic tax abuse, corruption and money laundering, according to a report by the UN commission calling for global crackdowns.
The UN Panel on Financial Integrity for Sustainable Development urged governments to review tax rules and the banking system to help end poverty and address the climate emergency.
It said that up to 10% of the world’s wealth could be hidden offshore at a time when governments were under increasing financial pressure from the Covid pandemic and as inequality grows.
The panel of world leaders, central bank presidents and representatives of business and civil society said criminals launder assets worth 2.7% of global GDP every year.
They said it was alarming evidence of the way the international financial system was being skewed in favor of the wealthy, that even during a pandemic, billionaires’ wealth had risen 27.5% between April and July last year, when the rest of the world was submerged. in turmoil.
In its final report, the High-Level Panel on International Financial Accountability, Transparency and Integrity (Facti) says that more coordination between countries is needed to impose sanctions on those who enable financial crime.
Ibrahim Mayaki, the panel’s co-chair and former Prime Minister of Niger, said, “Closing loopholes that allow money laundering, corruption and tax abuse and stopping bankers, accountants and lawyers from enabling crime, are steps in transforming the world economy for the universal good. “
The report calls for an international minimum corporate tax rate, more progress in taxing digital businesses, and measures to improve transparency of corporate property and government spending.
It says an agreed minimum tax rate of 20-30% on corporate profits would help limit the incentives for multinational companies to shift profits made in any part of the world to a lower taxable jurisdiction, and a race to the bottom between countries. .
At George Osborne’s initiative following the 2008 financial crisis, the UK has steadily cut its corporate tax rate to 19%, one of the lowest in the advanced world. However, the government is considering raising the tax rate. Ireland’s corporate tax rate is 12.5%. Several British overseas territories and dependencies of the crown, including the British Virgin Islands, Guernsey and Jersey, have zero corporate tax rates.
Demands for tougher global action on tax avoidance and evasion come as the coronavirus pandemic blows a hole in the public finances of governments around the world amid a boom in emergency spending and economic activity collapse.
The Facti report says that narrating losses from tax avoidance and evasion could help countries like Bangladesh extend its social safety net to 9 million older people, in Chad it could pay for 38,000 classrooms and in Germany it could pay 8,000 wind turbines. to build.
Dalia Grybauskaitė, Facti’s co-chair and former president of Lithuania, said: “Our report rests on two simple ideas: restore public finances by repairing a broken system, and use the trillions of dollars released to eradicate poverty. Covid and tackle. the climate crisis. “