Jean Lambert, the Green MEP for London, has this week called on the US President to advance efforts to close tax havens at the G20 talks taking place in Pittsburgh.

In an open letter to Mr Obama [1] drafted by French Green MEP Eva Joly, Jean Lambert and other signatories have stressed that Europe suffers from the same loopholes in its tax system that the President has committed to tackling in the US, which allow companies and individuals to avoid paying their fair share.

The letter calls for all territories currently known to be tax havens to be required to adopt a system of automatic information exchange, so that state tax collectors can pursue those not making the appropriate contribution. It also demands that international corporations implement “country-by-country reporting”, including providing the amount of their assets, global income, the number of people they employ, the profits they make and the taxes they pay for each country in which they operate. This is a measure currently supported by Belgium, South Korea, Norway, Sweden and the United Kingdom.

Ahead of a debate in Brussels next week led by Eva Joly on the role that tax havens play in hindering development [2], Jean Lambert MEP commented:

“It is estimated that tax havens drain the UK economy of an estimated £25bn annually through their role in tax avoidance and evasion, and hundreds of billions are lost globally every year.

“While the G20 has put considerable pressure on tax havens to sign “on request” tax information exchange treaties, this has not been sufficient to put a stop to the practice of country-hopping to avoid paying taxes.

“During this recession there should be a renewed global effort to close these tax havens and secure the appropriate tax income for tax-collecting states, for the benefit and stability of both developed and developing countries that are currently losing out.” 

Notes to Editors

[1] Full text of letter to President Obama

Mister President Obama,

We, citizens and members of the parliaments of several European countries and of the European Parliament, call for your support to ensure the next G20 talks in Pittsburgh bring about decisive progress in the fight against tax havens.

On 4th of May, you declared that the American tax system was “full of corporate loopholes that make it perfectly legal for companies to avoid paying their fair share.  It’s a tax code that makes it all too easy for a number — a small number of individuals and companies to abuse overseas tax havens to avoid paying any taxes at all”. We suffer from this same issue in our own countries in Europe, and wish to put an end to this situation without further ado.

As a measure to counter this injustice, the G20 put considerable pressure on tax havens to sign “on request” tax information exchange treaties in order that information be made more readily available to the relevant tax authorities. This is a step forward, but it remains insufficient. Often diverted from their orginal purpose, they can even contribute to aggravating the issue.

To pursue tax evaders who refuse to pay a fair contribution to society, these territories must be required to adopt a system of automatic information exchange and must inform us every time one of our citizens does business in their territory. Those who go there for legitimate purposes will have nothing to fear.

Furthermore, international corporations must implement “country-by-country reporting”, which would allow the tax authorities to know the amount of their assets, their global income, the number of people they employ, the profits they make and the taxes they pay for each country in which they operate.  This will shed light on unlawful behaviours. Belgium, South Korea, Norway, Sweden and the United Kingdom support this initiative, which now needs your whole-hearted support.

In 1937, Roosevelt’s Secretary of the Treasury Henry Morgenthau declared that “Taxes are what we pay for civilized society. Too many citizens want the civilization at a discount”. We are counting on your long-term commitment in the fight against tax havens in order that every one of our citizens and companies pay their fair share to society.

To fund our economic stimulus plans, to foster investments, to fight against corruption and activities that hinder the development of impoverished countries, and to support those hit by the crisis, diverting funds that should serve the common good through tax havens must be made impossible.

We are counting on your efforts at the international level to bring down the barriers we have been fighting against for so long.

Received, Mister President Obama, our highest considerations.

[2] The debate “Tackling Tax Havens: A Challenge for Development?” hosted by French Green MEP Eva Joly will be held on Tuesday 29 September 2009, between 13:00 and 14:30 at the Madariaga – College of Europe Foundation, 14 Avenue de la Joyeuse Entrée, 1040 Brussels (close to Rond-Point Schuman). To register, send your name and organization to info@madariaga.org or call +32 (0)2 209 6210.