Government has ‘questions to answer on tax avoidance’, Oxfam report finds

The Government has questions to answer with regard to its stated commitment to tackling tax avoidance, according to the head of charity Oxfam Ireland.

Jim Clarken's remarks follow Ireland being named in an Oxfam report as one of four EU states that would be blacklisted as a tax haven if the European Union applied its own criteria to member states.

EU finance ministers are expected to publish a tax haven blacklist at their Ecofin meeting next Tuesday (December 5th).

“As Ireland fails the EU’s blacklisting criteria, it is clear that the Government has questions to answer with regard to its stated commitment to tackling tax avoidance,” Mr Clarken said.

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“The analysis in this report uses the very measurements the EU is currently applying to 92 non-EU states to assess whether they should be blacklisted as tax havens. Sadly, this analysis places Ireland in an elite club with three other EU countries.”

In a report entitled Blacklist or Whitewash, Oxfam says that, even on a conservative assessment , the blacklist should include at least 35 countries – including Switzerland, Singapore, Hong Kong and United Arab Emirates, alongside more familiar names like the Cayman Islands, the Bahamas and Bermuda.

Ireland, it says, fails to meet the criterion on fair taxation. As an example, the report says that royalties sent out of Ireland in 2015 were equivalent to 26 per cent of the State’s gross domestic product.

Argue

Oxfam says corporate tax revenue losses are running at about $100 billion (€84 billion) a year, citing the 2015 Unctad World Investment Report.

“Just one-third of this amount would be enough to pay for the essential healthcare that could prevent the needless deaths of eight million people,” the report’s authors argue.

They note IMF data from 2015 stating that corporation tax receipts are more important for developing countries – accounting for 16 per cent of all tax receipts against just 8 per cent for “high-income” countries.

The move to produce tax haven blacklists follows a series of high-profile tax scandals, notably LuxLeaks and the Panama Papers, through the work of the International Consortium of Investigative Journalists in Washington DC, of which The Irish Times is a media partner. Many of the countries feature also in the more recent Paradise Papers.

The Organisation for Economic Co-operation and Development published its list earlier this year but only one country, Trinidad & Tobago, was named.

Oxfam says the EU’s criteria are more ambitious and more comprehensive. But the charity expresses concern that some havens will escape listing, as economic and diplomatic considerations influence the final report. Switzerland has already expressed confidence that its name will not appear.

The agency is also wary that decisions on which countries do and do not appear on the list is in the hands of a secretive group of national tax officials known as the Code of Conduct Group, and that a more commitment too reform would be enough to avoid listing rather than any concrete actions to end tax haven structures.

“It is now up to the EU to demonstrate that it can produce as robust blacklist to effectively put an end to tax havens,” Oxfam says in the report.