17/02/17

Exclusive: Ecuador to hold historic referendum on tax havens

The outline is simple: politicians and civil servants cannot have assets in tax havens. If they do, they would have one year to bring them back to the country, or face removal from office, reports New Internationalist.

This the radical proposal that the Ecuadorean government is putting in front of its people, in the form of a referendum.

On Sunday 19 February, alongside general elections, Ecuadorean citizens will have a yes/no vote on a complete ban for politicians and civil servants to have assets or companies in tax havens. It is the world’s first referendum of its kind.

‘Tax havens are one of the biggest obstacles to the development of our country and to the reduction of dire inequalities and poverty,’ says Foreign Affairs Minister Guillaume Long in an exclusive interview with New Internationalist.

Mr Long explains that, according to his government, about 30 per cent of the country’s GDP – about $30 billion – is currently hidden in tax havens, depriving the country of tax revenues that could help development, a problem that the Panama Papers scandal has highlighted, making the need for action more urgent.

A number of Ecuadorean politicians have been linked to the Panama Papers, including opposition candidate Guillermo Lasso of the right-wing Creo Suma party. Lasso is the leading candidate to challenge Guillaume Long’s and President Rafael Correa’s left-wing Alianza Pais party, which has been in power for 10 years.

‘There’s a striking contradiction there between the patriotic discourse of wanting to run for office and bringing foreign investment to the country […] on the one hand, and having a self-avowed practice of having capital, investments, and accounts in tax havens, on the other hand,’ says Guillaume Long.

New Internationalist’s attempts to contact Creo Suma for comment have been unsuccessful at the time of writing.

Mr Long said there’s ‘an even greater contradiction’ with the Ecuadorean migrants: over two million Ecuadoreans left the country since the 1990s, and regularly send small remittances back to Ecuador to their families, while elites send millions away.

‘It’s a very ambitious and very symbolic referendum,’ says Mr Long. ‘It doesn’t solve the whole tax haven issue – it only affects public workers, civil servants – but it seeks to position the debate on the national agenda.’

Meanwhile, Ecuador is also drafting a proposal to create a UN body to regulate tax havens and tax justice globally. The idea is not new, but in the past it has always fail for the opposition of first world countries, including Britain.

The proposal comes soon after Oxfam published a report revealing that the eight richest people in the world own as much wealth as the poorest 50 per cent.

On Sunday 19 February, Ecuadoreans will also choose their president and vice president. After victories of right-wing parties in countries like Argentina and Brazil, there has been talk of a shift in tides in Latin America, where the left wing has been in power, but Mr Long rejects that claim.

‘We shouldn’t think that this number of defeats that we’ve had in the region mean an end of cycle or a return to the neoliberal hayday of the 1990s,’ he says.

‘Even in the cases where the left loses in Latin America, it’s the second biggest force, sometimes it has a parliamentary majority, and is poised for a comeback.

‘I think it’s important that Ecuador wins, that the progressive forces in Ecuador win on Sunday because I think it would send a very strong signal in the region that the few electoral defeats of the last few months and years have come to an end, sending a strong signal that progressive forces are still very much alive and well, and that this is going to be the progressive century for Latin America.’