Call for tax haven free cities and local governments

thfc_yes.pngTax is a condition for our common welfare and infrastructure. Our mandate as elected local politicians is to take responsibility for the money citizens pay in taxes. This mandate has unfortunately become increasingly more difficult to perform, since the tax-funded welfare is threatened by those who use the loopholes in the law in order to avoid paying tax. Multinational corporations have set the system to manipulate their accounting in order to transfer profits to tax havens.

While municipalities, regions and nations are tormented by the economic crisis, tax havens are flooded with money. A total of 21-32 trillion dollars is hidden away in tax havens. Due to tax evasion and tax avoidance, the European Union loses 1 trillion Euros every year, which is more than the total healthcare expenditure of all EU memberstates combined. Poor countries lose tax revenue exceeding the annual global total of development aid. This widespread tax evasion can only flourish because governmental institutions have not caught up with the globalized economy.

If the fortunes hidden in tax havens were fairly taxed, there would be plenty of resources for investment in welfare services, in international solidarity and in a sustainable transition that could save our climate. We all benefit from living in a civilized society with tax-funded common welfare and infrastructure. Therefore all should contribute and pay their fair share. Even the biggest companies and banks.

Due to pressure from social movements and other organisations from the civil society, the issue of tax evasion through tax havens is now on the agenda of the EU, OECD, G8 and G20, but realising new global agreements takes time.

As local politicians we therefore want to stop taxpayers’ money from going to companies, banks or mutual funds that use tax havens for tax evasion. For example, by taking back services into public hands or by imposing requirements for country-by-country reporting, which would show if bidders in public procurement paid a fair tax in every country they operate in. Since 2010 French regions have started to act in order to require more transparency in the accounts of the banks they are working with. In Sweden, Norway and Finland some municipalities are taking strong steps towards increased transparency and responsible tax practices in their public procurement.

Local governments that require bidders in public procurement not to use tax havens believe that it is in accordance with the law’s intention with regard to good business ethics, transparency and equal treatment. Companies using tax havens in order to avoid paying their full taxes can put forward lower bids, which is contrary to the principle that all providers should have equal opportunities.

It is unfair to honest small business owners and it creates distorted markets.

Through democratic decisions we can promote tax justice. We want to achieve:

• Cooperation and transparency instead of the secrecy provided by tax havens, the corporate manipulated accounting and the tax competition between countries.

• A public register of companies’ real owners, including all shadow structures like trusts, private foundations and shadow companies.

• A global agreement on automatic exchange of information between tax authorities.

• Country-by-country reporting by multinational corporations in all sectors showing their financial activities for each country in which they operate to make visible their tax strategies.

We urge politicians at national and international levels to press for a new international framework that can assure the life-blood of our communities – namely, a fair taxation income.

Local governments in all countries can cooperate and better utilize the possibilities available today to be ”tax haven free”, i.e. to prevent tax money from going to companies, banks or other financial institutions that use tax havens for tax evasion.