GLOBAL REGULATION: G20 ministers urged to use oligarch crackdown to tackle tax havens.

As published on theguardian.com, Tuesday 19 April, 2022.

G20 countries are being urged by a group of renowned economists to use the crackdown on oligarchs’ wealth amid Ukraine sanctions as a spur to tackle tax havens once and for all.

An open letter sent to the 20 finance ministers before they meet on Tuesday called on them to implement a global register to link assets, companies and structures to their owners so they could no longer deprive countries of what they owed.

Its 14 signatories – all commissioners of anti-tax avoidance group the Independent Commission for the Reform of International Corporate Taxation (ICRICT) – include the economists Gabriel Zucman, Joseph Stiglitz and Thomas Piketty, as well as the French investigative judge Eva Joly.

They argued that the concentration of extreme wealth hidden in tax havens was increasing inequality and impoverishing the poorest in society, and demanded reform of an international financial system that was “skewed in favour of wealthy tax abusers”.

Since the start of the pandemic, the world’s richest people have seen their wealth double to $1.5tn (£1.01tn), yet the ICRICT commissioners found the gap between rich and poor had only widened during that time, a situation that had been exacerbated by the conflict in Ukraine and had left many of the poorest facing a cost of living crisis and soaring energy and food bills.

They wrote that members of the global elite often hid their wealth “through elaborate structures to avoid paying taxes, but also to hide money generated by corruption and illegal activities … Global finance allows tax abuses, corruption and money laundering to flourish.”

Attempts to sanction assets belonging to Russian oligarchs after Vladimir Putin’s invasion had highlighted what the signatories caled the “wall of opacity” over where their wealth was held, causing difficulties for nations looking to impose penalties on those with links to the Kremlin.

The letter read: “The war in Ukraine shows that we need to tackle tax havens head-on now, by implementing transparency measures as a matter of urgency. It is about targeting all oligarchs, and all forms of wealth hidden from the tax authorities and the public in general and hidden in jurisdictions with high levels of financial opacity.”

Some progress in linking wealth to its real owners had been made in recent years, according to the group, including the automatic exchange of financial account information, and the introduction of national registries of beneficial ownership. However, they said previous developments had lacked “political will”, prompting them to urge the G20 countries to do more.

Huge leaks of documents – including the Panama Papers, the Paradise Papers, and most recently Suisse Secrets – have highlighted the activities of wealthy individuals and companies, and their use of offshore tax havens. However, despite the resulting pressure on governments to take tougher action on tax, activists say little progress has been made to crack down on their use.

The ICRICT economists proposed the introduction of an international network of asset registries that listed all different forms of wealth: from assets including property, yachts, jets and jewellery; to bank accounts, cryptocurrency assets and safe deposit boxes; as well as trusts and other legal arrangements; and even intangible assets such as intellectual property and trademarks.

These would be linked to their actual, beneficial owners, who may be different to their legal owners. The economists said a global asset registry that detailed what was owned where and by whom would enable countries to record and analyse wealth and inequality and would lead to greater enforcement of tax laws while hindering those who wanted to pursue illicit activities.

The commissioners urge G20 leaders to convene an urgent international summit to implement such a system and discuss offshore wealth and tax havens. “No more excuses, no more pandemics, no more wars to justify lack of action,” they sign off, concluding that such action was required “to preserve democracy, end spiralling inequality and rebuild the social contract”.