In response to the revelations of wholesale tax evasion in the Panamanian tax haven, Oxfam International launched an international campaign advocating for the eradication of tax havens and fiscal opacity.
Ecuadorian President Rafael Correa, has become the first head of state to actively sign, endorse and promote Oxfam's letter and campaign. The Ecuadorian leader has reaffirmed his commitment to push the changes advocated by the campaign from his position as president.
“We must create a global institutional framework that would eliminate tax havens, where capital has no face or responsibility,” Correa said. “We will seek to include this key issue on the agenda of the United Nations General Assembly. Coordinate with the G77 countries to ban tax havens.”
Offshore hidden wealth is estimated to globally amount to about US$36 trillion. With at least $12.1 trillion being siphoned out of the economies of developing countries, this figure makes up 15% of the world's entire economy.
The recent revelation of the Panama Papers, leaked from the Mossack Fonseca law firm, shed much light on the reality of global tax evasion. At the same time it was a reminder of the specific jurisdictions that legally allow the creation of “shell companies” that facilitate tax evasion, money laundering and similar illicit activities.
Some of the most prominent figures whose use of tax havens was revealed in the leaks range from world political leaders to Argentine football star Lionel Messi. Heads of state caught up in the leaks include Austalia's Malcolm Turnbull, Argentina's Mauricio Macri, Ukraine's Petro Poroshenko. Saudi Arabia's King Salman, and the United Arab Emirates' Khalifa bin Zayed bin Sultan Al Nahyan.
Iceland's now ex-Prime Minister Sigmund Gunnlaugsson was also caught up in the controversy. Gunnlaugsson was forced to resign amid public uproar and mass protests provoked by his involvement with shell companies in tax havens.
The anti-tax haven initiative has important implications for Ecuador's presidential election, set for next February. Correa said: “We are studying it … to present it at the National Assembly where the Ecuadorian people has given us an extensive majority…
“We are discussing about principles, moral pillars of our society; we will be at the world's forefront because everyone talks about tax havens, but as they are dominated by power and financial capital they do not offer concrete solutions.”