G77 leader Ecuador leads demand for Global Tax Body

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01/19/2017

On January 12th, Ecuador’s Minister of Foreign Affairs Guillaume Long met with civil society groups to discuss tax justice in Washington, in an event titled “Tax Avoidance, Illicit Financial Flows and Global Development: A Call for a United Nations Tax Body”.

 

 

The event got a quite diverse media coverage, among which this piece in the Huffington Post, New Developing Nations Leader Has Big Plans To Crack Down On Global Tax Dodging, with a video interview of Guillaume Long.

Please find below the Press Release published by Ecuador’s Ministry of Foreign Affairs, following this public debate, co-sponsored by the Global Alliance for Tax Justice, its members Latindadd and FACT Coalition, and its partners Jubilee USA, Center for Economic and Policy Research, Center of Concern, Financial Transparency Coalition, Public Citizen and the Latin American and Caribbean Tax Justice Network.

“NGOs and experts in Washington DC join with Ecuador in the struggle against tax havens”

Influential NGOs, economists and tax experts in Washington DC have come together with Ecuador for the first time in the struggle against tax havens at an event “Tax Avoidance, Illicit Financial Flows and Global Development: A Call for a United Nations Tax Body”.

The initiative, on 12 January 2017, took place the day before Ecuador took the presidency of the influential G77 group of 134 developing countries at a high level ceremony in New York at the United Nations. Ecuador has committed to prioritise finance for development and the struggle against tax havens in its presidency. The event also comes a little over a month before a pioneering referendum in Ecuador on tax havens.

At the event, experts Eric LeCompte, Jubilee USA; Mark Weisbrot, Center for Economic and Policy Research; Elise Bean, Former Staff Director and Chief Counsel of the U.S. Senate Permanent subCommittee on investigations; Aldo Caliari, Center of Concern;  and Clark Gascoigne, FACT Coalition gave their support to the Ecuadorian initiatives on tax havens.

Guillaume Long, Ecuador’s Minister of Foreign Affairs said:

“Our government has introduced very redistributive policies in the most unequal continent on earth. Our priority is to fight inequality which is the cause of most of problems we face. Ecuador has seen big improvements in living standards over the last decade due to major economic reforms including a tripling of tax take achieved overwhelmingly by collecting taxes, not by raising them. This has become an important source of investment in public services. The next stage in this battle for a fair economy is against tax havens”

“Tax havens are a real ethical problem. For example, while Ecuadorian migrants loyally work long hours to send remittances to Ecuador, an elite section of the population syphons billions of dollars back out of the country to tax havens.

Speaking of the referendum in Ecuador against tax havens to be held in Ecuador on 19th February, the Minister said “Ecuador will be first the country in world to hold such a referendum. It will be down to the people to decide”.

“The struggle against tax havens is a global struggle. We need a UN tax body to ensure tax justice. Ecuador will unite with all those fighting this battle – states and civil society”.

The event moderator Eric LeCompte, Director of Jubilee USA, said:

“This conversation today comes at a critical moment. Due to tax evasion and corruption the developing world loses more than a trillion dollars a year because of tax evasion and corruption.”

“These tax issues are a global problem and require a global solution. Addressing tax havens is like a carnival game of whack-a-mole. You deal with problem in one place and it pops up in another.”

Economist Mark Weisbrot, Co-Director of the Centre for Economic and Policy Research (CEPR) said:

“Latin America did go through a decade where poverty was reduced from 44 to 28 % in the region as a whole.The standard narrative is that this was just a commodities boom. Ecuador is probably the best example of why that is really not true.

They had to do a whole set of institutional, policy and financial reforms in order to achieve the success that they did, and they did achieve success. They have reduced poverty by 30% by 2014. They reduced inequality. They increased access to healthcare. They tripled the amount of GDP that went to public investment.

They were able to build the institutions and do enormous financial and regulatory reforms, that we could use here in the United States. They took control of the financial system and regulated it really for the first time in the way it should be regulated. I think the referendum on tax havens is very creative and innovative.”

Aldo Caliari, Director of the REthinking Bretton Woods Project, Center of Concern said:

“The battle for an intergovernmental body was not won in Addis Ababa. We need to keep struggling. A UN intergovernmental body is about who defines the rules of the game”.

“I salute the efforts” of Ecuador to raise awareness and pressure against tax havens. “I like the significance of the fact that Ecuador, with this mindset of achieving progress, is taking over the G77 presidency, because it is critical.”

Elise Bean, Former Staff Director and Chief Counsel of the U.S. Senate Permanent SubCommittee on investigations welcomed Ecuador’s work against tax havens saying:

“One of the really interesting things is about how Ecuador is giving us an example about how if you strengthen the capacity to collect taxes it really contributes to stability, to the ability to fight poverty. This culture of paying taxes is a remarkable achievement and is something that should be studied and I think we should try to replicate it elsewhere.”

“I have tremendous admiration for Ecuador, to show that it is possible to build a culture of paying taxes. I congratulate you on your country’s progress.”

Clark Gascoigne, Deputy Director of the FACT Coalicion said:

“Illicit financial flows have a devastating impact on developing countries, wringing tens of billions of dollars out of the developing world. But also have a major effect on developed countries. $150 billion dollars is the most recent estimate of the cost to the US from tax haven abuse annually. This of course exacerbates inequality, leads to austerity and undermines our ability to act collectively and solve problems.”

Porta McConnell, Director of the Financial Transparency Initiative said after the meeting:

“I have been very impressed by the leadership that Ecuador has demonstrated on this issue of tax havens and on the issue of illicit financial flows more widely. We have been working with the government of Ecuador for some months to draw attention to the issue and to support the leadership role of Ecuador in the G77. We are very excited to see what comes next and are very supportive of the efforts of Ecuador.”

The referendum in Ecuador on 19th February, known as the “ethical pact” will ask “Do you agree that, for those holding a popularly elected office or for public servants, there should be a prohibition on holding assets or capital, of any nature, in tax havens?” Public servants and elected officials will be given a year to repatriate their capital or be removed from office or their post.

 

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