According to the Tax Justice Network:
Tax is the most important, the most beneficial, and the most sustainable source of finance for development. Tax is also the nexus between state and citizen, and tax revenues are the lifeblood of the social contract: the very act of taxation has profoundly beneficial effects in fostering better and more accountable government. Tax has many other benefits too, such as the fact that it does not, unlike aid, result in Dutch Disease effects, which have devastated many mineral-rich economies and have seriously blighted many aid-dependent ones too. Read more here. It is astonishing that so many members of the aid community have ignored tax for so long. Action on international taxation is, quite simply, the key to lifting hundreds of millions of people out of poverty.
Tax haven (see glossary below) allow big companies and wealthy individuals to benefit from the onshore benefits of tax – like good infrastructure, education and the rule of law – while using the offshore world to escape their responsibilities to pay for it. The rest of the people shoulder the burden.
Tax havens offer not only low or zero taxes, but something broader. What they do is to provide facilities for people or entities to get around the rules, laws and regulations of other jurisdictions, using secrecy as their prime tool. The Tax Justice movement often prefers the term "secrecy jurisdiction" instead of the more popular "tax haven."
The corrupted international infrastructure allowing élites to escape tax and regulation is also widely used by criminals and terrorists. As a result, tax havens are heightening inequality and poverty, corroding democracy, distorting markets, undermining financial and other regulation and curbing economic growth, accelerating capital flight from poor countries, and promoting corruption and crime around the world.
The offshore system is a blind spot in international economics and in our understanding of the world. The issues are multi-faceted, and tax havens are steeped in secrecy and complexity – which helps explain why so few people have woken up to the scandal of offshore, and why civil society has been almost silent on international taxation for so long. We seek to supply expertise and analysis to help open tax havens up to proper scrutiny at last, and to make the issues understandable by all.
The fight against tax havens is one of the great challenges of our age.
Tax Justice Glossary
- Refer to the Tax Justice Glossary page.
- The Tax Justice Network defends Tax Justice as the most effective tool for development and democracy.
It is an independent organisation dedicated to high-level research, analysis and advocacy in the field of tax and regulation.