Thursday, October 18, 2007

A Code of Conduct for Taxation

We have launched a Code of Conduct for Taxation.

It is astonishing that international tax policy has for decades been formulated and promoted by tax specialists, who are usually beholden to large corporations or vested interests, and who are highly trained in the art of manipulating numbers, but not in the art of democratic politics. One result of this has been a profound sense of unease about the process of international financial liberalisation, stemming from a feeling by ordinary people that the system is rigged in favour of a small minority.

Co-operation between countries on tax and in related fields tends to be confined to narrow issues like money-laundering. Much bigger issues are quietly avoided. Footloose corporations and elites consequently use the uncoordinated international architecture to play jurisdictions off against each other, using tax havens and the services of a global tax avoidance industry (accountants, lawyers, and banks) to avoid taxes, leaving others to shoulder the tax burden. Governments tend not to support each other in this field, probably because each gains advantage from attracting tax dollars from others. As a result of this international game of beggar-thy-neighbour, millions of people go without adequate healthcare, pensions, education, housing and other necessities, and governments cannot fund proper social investment or redistribute wealth. Citizens feel less engaged in national democratic politics.

Until recently civil society organisations have been meek in the face of the tax steamroller, and a lot of protests about the effects of globalisation have focused on international trade policies, not on international tax policies. But this is now changing. TJN, and others, are helping people to notice that tax is the missing link in the debate about international development.

So, as part of our effort, The Tax Justice Network, in partnership with the Association for Accountancy and Business Affairs, and Tax Research LLP (run by TJN’s Richard Murphy,) are launching this Code of Conduct for Taxation. We hope that this code will help re-balance the equation. As Richard notes:

The Code is based on principles. This is essential. A member of the UK’s accounting profession once said: “Rules are rules, but rules are meant to be broken . . . no matter what legislation is in place, the accountants and lawyers will find a way around it”. Principles are much harder to abuse, and it is time that the professions were asked to account for the principles they promote, and required their members to commit to them.

International tax policy may seem distant and arcane, but it is not – it affects all of us, every day, and in profound ways. The Code is a short document. The supporting arguments, which are more detailed, can be found here. Or, read about it in Accountancy Age. Over time, it may be adjusted in response to experience or developments. Please take a look now, and join the debate.

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