Tax Justice Network

The Tax Justice Network (TJN) is a coalition of researchers and activists with a shared concern about what they argue are the harmful impacts of tax avoidance, tax competition and tax havens, which "corrupt national tax regimes and onshore regulation, and distort markets by rewarding economic free-riders and mis-directing investment." The use of "justice" in the name illustrates its philosophies towards taxation, including a belief that taxes can be a tool for social justice. The TJN was founded by Richard Murphy.

According to its 2009 accounts, the "The Tax Justice Network International Secretariat Limited" is a UK company controlled by Tax Justice Network Association Sans But Lucratif, a Belgian charity.

TJN publishes the Financial Secrecy Index, ranking 73 secrecy jurisdictions according to both their secrecy, and the scale of their activities.

Philosophy

Key ideals promoted by the TJN include tax co-operation, level playing fields, democratic taxation and transparency.

Progressive taxation

According to the group, progressive taxation requires that:

1. Income taxes should have progressive rates (i.e., increase with higher rates of pay);
2. Value Added Taxes (or VAT) should operate with exemptions to protect the least well off in any society;
3. Social security contributions should not be capped;
4. Capital gains taxes should be part of all tax regimes, and should not offer significant tax incentives when compared to income taxes (i.e., no avoidance by restructuring affairs to characterise income as capital gains);
5. Wealth or inheritance taxes should be in operation;
6. Tariffs and trade taxes should used when needed to protect fledgling industry, natural resource exploitation or when they are cost effective alternatives to charges on the poorest members of a society.

The group's support for progressive taxation means that it is opposed to regressive taxation. Regressive taxation they characterise as including:

1. Flat taxes;
2. Income taxes with capped liabilities;
3. VAT without exemptions;
4. National insurance regimes that cap contributions;
5. Low rate capital gains tax regimes;
6. the absence of wealth related taxation;
7. Substantial allowances and reliefs available only to the well-off meaning that they pay lower than average real rates of taxation;
8. Benefit systems that create high effective marginal rates of taxation.

Transparency

In relation to transparency, the TJN's philosophy supports:

1. Relevant company details being made publicly available for inspection, wherever the company is incorporated in the world. This would include details of its constitution, ownership, management and accounts. This requirement would extend to all other entities created by law including charities, foundations, trusts, partnerships with limited liability as well as material entities run by individuals and partnerships without limited liability;
2. Banning the use of all nominee arrangements whether for ownership or management;
3. Wide disclosure by groups of companies of accounting information;
4. All tax accounting to be made available to tax authorities;
5. All tax disclosure to be consistent and to be made on the basis that (in the group's words) all "cards are face up on the table".

The TJN is fundamentally opposed to:

1. Tax havens;
2. Unpublished accounts, constitutions, membership information and management details for all entities created by statute;
3. The use of nominees;
4. Banking secrecy when used to prevent tax disclosure;
5. Trusts when used to create tax advantages or to recreate the effects of banking secrecy laws;
6. Inconsistent or incomplete tax disclosure;
7. Non-disclosure of tax accounting by legal entities;
8. The use of consolidated financial statements to hide offshore and other transactions of which the group may not wish its shareholders and others to be aware.

Organisation

According to its website, the organisation is committed to:

• Is committed to supporting the launch of a Tax Justice Network for Africa in 2007
• Organising an annual workshop bringing together researchers, campaigners and policy makers

According to its website, the TJN is directed by an International Steering Committee elected from their global membership. They claim to have legal, economic and tax specialists to advise on policy issues, and an expert group to assist with publication of briefing papers.

The group has an International Secretariat based at the New Economics Foundation in London. It is constituted as a not for profit association. The managing body is Council of Members and Supporters which meets annually.

Criticisms

Some people have argued that whilst they are in agreement with the objectives of the Network, mention is hardly ever made A Manifesto for Tax Justice of the fact that most present-day tax systems are vulnerable to avoidance and evasion.

People are mobile, whilst corporations exist in multiple locations and through the use of transfer accounting, profits can be made to disappear and reappear in ways which are the most advantageous from the point of view of minimising tax liability.^{[citation needed]} Yet the taxation of people and corporations remains the primary source of government revenue.

To date, it is a major weakness of the Network that its members have largely failed to deal with the need for tax reform with a view to making the tax systems themselves more secure and less vulnerable to avoidance and evasion.

Another criticism is that, by decreasing competition among governments to provide better services at lower cost, the Network is promoting what is essentially a price-fixing scheme by a cartel of high-tax jurisdictions.

Membership

The network's members are said to include:

• development organisations and NGOs;
• faith groups;
• trade unions;
• academics;
• journalists;
• economists;
• financial professionals, and
• public-interest groups.

Founding objectives

The founding objectives of the network are:

• to raise the level of awareness about the 'secretive' world of offshore finance;
• to promote links between interested parties around the world, particularly involving developing countries;
• to stimulate and organise research and debate;
• to encourage and support national and international campaign activity.

The cornerstone of the organisation's objectives is the belief that tax havens cause poverty.

Campaigns and campaign objectives

The campaign objectives of the organization are explained in part 2 of the Declaration A Manifesto for Tax Justice, and some broad policy proposals are outlined in the annex to the Manifesto.

The TJN campaigns to identify and remedy the deficiencies of national and international tax policy frameworks and to support the activities of existing campaigns in different countries by connecting them to a worldwide movement.

In particular they aim to:

• promote more local campaigns for 'tax justice', especially in developing countries; and
• provide a medium through which such issues can be promoted within multilateral agencies such as the United Nations, the World Bank, the International Monetary Fund (IMF), the Organisation for Economic Cooperation and Development (OECD) and the European Union.

The TJN assets that the purpose of trying to operate at this level is to counteract the activities of legal, business and accounting lobbying organisations which they claim devote considerable time and money to securing favourable tax treatment on behalf of wealthy individuals and powerful corporations.

Publications

The network offers a free publication called Tax us if you can, which offers a guide to the language of international tax policy and shows how professionals profit from 'abusive tax practices'. It also outlines the numerous policy failures that have encouraged the creation of the 'shadow economy' of tax havens and proposes a range of practical solutions to this global crisis.

In March 2005 the network published a briefing paper called The Price of Offshore which estimated that the amount of funds held by individuals in offshore tax havens, is about 11.5 trillion US dollars. Using this estimate they calculated the worldwide tax revenue lost on the income from these assets at 255 billion US dollars annually. This amount, if correct, would more than plug the financing gap to achieve the United Nations' Millennium Development Goal of halving world poverty by 2015 assuming that it could be collected by national governments and was then diverted to that purpose.

In June 2000, Oxfam published a report called Releasing the Hidden Billions for Poverty Eradication, which drew attention to the supposed harmful impacts of tax havens on developing countries and proposed to identify why such impacts are felt more forcefully there.

External links

• Tax Justice Network website
• The Price of Offshore, briefing paper of the network
• Tax us if you can, free publication of the network
• Tax blog of Tax Justice Network's research adviser