Ecuador ramped up its fight against tax dodging on September 21 as the South American country proposed a plan on the sidelines of the UN General Assembly in New York aimed at tackling offshore tax havens with stiffer regulation.
The push comes in the wake of the Panama Papers leaks that exposed just the tip of the proverbial iceberg of global tax evasion and its impact on the global South.
The proposal, championed by Ecuadorean foreign minister Guillaume Long, calls for a specialised UN-led body to tighten the reins on fiscal issues by cracking down on multinational corporations and economic elites skirting their tax obligations through offshore schemes and other tax evasion tricks.
“We need economics that put human beings first,” said Long during the discussion on tax justice in New York. “If money hidden in tax havens return to Ecuador, just imagine how much growth we may have in economic activities. It would increase investment levels and give us more resources to build more homes and hospitals.”
Financial leaks and other research have shown widespread illicit financial activities siphon billions of dollars in evaded taxes away from public coffers and into the pockets of the world's super-rich.
In developing countries, this carries an annual price tag of an estimated US$200 billion in lost tax dollars. A clampdown on offshore havens and tax dodging could lift 32 million people out of poverty in Latin America alone, equivalent to the total number of people in poverty in Ecuador, Bolivia, Colombia, El Salvador and Peru.
In Ecuador, $3.4 billion was lost to tax havens between 2014 and 2015. For Ecuador, which has championed the fight against poverty under President Rafael Correa for nearly a decade, pursuing economic justice and wealth redistribution is a key motivation behind the fight to hold wealthy elites and corporations accountable.
Tax justice advocates pushed for urgent reform to democratise the global tax system during UN negotiations on financing for development negotiations in Ethiopia’s capital Addis Ababa last year, but member countries ultimately struck down the proposals for more stringent tax regulation.
Global justice groups said reforms must shift the burden to ensure that world’s richest 1% pay higher taxes for the developmental benefit of all.
Long said he was optimistic that the UN may favour heightened tax rules and a dedicated regulatory body to tackle the multi-billion dollar problem as more countries have put the issue on their agendas.
“There is a growing consensus that tax havens need to be tackled,” he told The Guardian. “It’s been an ongoing battle, but I think the time is right.”
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