Around a third of global assets are held offshore beyond the reach of effective taxation according to the Tax Justice Network. The TJN also estimates that private individuals hide $11.5 trillion in tax havens, depriving the rest of us of $250 billion a year in tax revenues.
You could do a lot with an extra quarter of a trillion a year – finance the UN’s Millennium Development goals or transform the world’s energy system to combat climate change for instance. But in the meantime, the response to the crisis and sovereign debt is increased taxes and reduced public services.
So how can we get the tax cheats to pay up? In Buenos Aires this week, tax commissioners from 45 countries plus representatives of big business and other organisations met to discuss “compliance” at the OECD Forum on Tax Administration. The Forum, created in 2002, brings together the people responsible for taxes at national level to “identify, discuss and influence relevant global trends and develop new ideas to enhance tax administration around the world”.
What have they done so far? Data from 20 countries that publish such information show that an extra $14 billion in taxes has been collected in the past two years. It’s a good start, but obviously a lot more has to be done. They’re dealing with highly mobile money that can be switched from place to place as havens become less safe and at the same time, tax administrations themselves are facing the same resource constraints as other parts of government, constraints the people they’re targeting don’t have to worry about.
The solution according to the FTA is to “work smarter” to optimise international cooperation, administration, compliance, legislation and service delivery. For an outsider like me, one of the most intriguing aspects of this is to be found in a list of publications with titles like “Guidance on Test Procedures for Tax Audit Assurance” and “Tax Reference Model – Application Software Solutions to Support Revenue Administration”. I discovered that the FTA is studying the use of social media by tax authorities.
In the US for example, the IRS has launched IRS2Go, a mobile app that lets users track the status of a refund, subscribe to e-mail updates, follow them on Twitter, and click to call a help line. Apart from providing services to the individual taxpayer, social media could also become important in another main aspect of FTA work – publicizing successes in getting tax avoiders to pay up or tax havens to close down so that those who once felt safe hiding their money feel more and more exposed to public scrutiny and public anger.
And imagine the kudos of having the tax inspector as your friend on Facebook.
Tweeting on your taxes The OECD Observer looks at the social media aspect