What’s happening now?
It’s a slow day in a poor country. But a few hundred wealthy and powerful individuals are rubbing their hands in anticipation.
An IMF loan is on its way. The loan comes in – there is a flurry of phone calls and visits to the central bank and treasury – and before you can say “capital flight” the money has flitted out to the world’s tax havens. All that’s left is the debt. Not to worry – the country’s poorest citizens can stump up for that.
Now there is a popular revolution, and the government’s corrupt officials are booted out. The new rulers want to know where the money has gone. They need it for vital public services. How can they find out?
They can’t – because of tax haven secrecy.
There may be an agreement with one or two tax havens, where the havens agree to share information. But these agreements are next to useless. The global standard promoted by the OECD, a club of rich nations, says that you must already know the precise information you’re looking for – the name of the tax cheat, their bank account details, and what they’re suspected of doing – before you even ask a tax haven for it! And even then, you have to fight your way through the tax haven courts to get confirmation of that information that you already knew about.
Enter Automatic Information Exchange!
European countries already share some information about their citizens automatically – you don’t have to ask for it.
It is time for the OECD’s useless system to be consigned to the scrap heap, and for automatic information exchange to be rolled out across the world. Tax havens must sign up, or be hit with defensive countermeasures.
Developing countries – and rich ones – must get the information they need to tax their wealthiest citizens properly.
Automatic information exchange is how they can do it.