‘An act of gross discriminatory bullying that will become the modern definition of colonialism’.
That is how prominent economist and non-resident Senior Fellow at the Peterson Institute for International Economics, Professor Avinash Persaud, has described the latest move by some European Union (EU) countries to list 30 small countries, including Barbados, as non-cooperative tax jurisdictions.
Last Wednesday, the European Commission published the list which was drawn up by 12 of its member states. Besides Barbados, the list includes 14 other Caribbean countries and territories.
Barbadian authorities have condemned the EU move with the support of several organizations including the Global Forum on Transparency and Exchange of Information for Tax Purposes which has suggested that the EU states in question are wrong in their assessment.
“The list is designed to tar-and-feather these countries, reduce their access to international development funds, and so pressure them into abandoning their international financial centres. It is an act of gross discriminatory bullying that will become the modern definition of colonialism,” said Persaud.
In one of his latest pieces written for the Peterson Institute for International Economics, Persaud charged that instead of “tarring and feathering the countries representing the greatest source of tax losses to the European Union”, they have chosen to be judge and jury over 30 small countries, powerless to defend themselves against wrongful accusations.
“The Netherlands, Ireland, and Luxembourg are under investigation by the EU Competition authorities for facilitating aggressive tax avoidance that formed the basis of their own international financial centres. These investigations followed the leaking of documents to journalists that showed Luxembourg had entered into 548 private tax rulings between 2009 and 2013 to allow 340 of the largest companies in the world to avoid paying taxes in EU countries. The companies included Pepsi, Amazon, Walt Disney, Procter & Gamble, IKEA, Heinz, Deutsche Bank, and J.P. Morgan. Yet Luxembourg, Ireland, and the Netherlands are not on the European Union’s list,” he said.
Persaud contended that the mix of countries that has “tax minimizing regimes” was not differentiated by size, whether they were considered rich or poor or black or white. “But the EU list is. This kind of discriminatory bullying will serve to undermine international efforts to establish a level playing field on tax matters,” said Persaud.
“Why should countries sign the Organization for Economic Cooperation and Development’s Convention on Mutual Administrative Assistance in Tax Matters, as many of the targeted countries have, if they still get tarred without any due process based around evidence, nondiscrimination, and other aspects of natural justice? Such discrimination also fosters the very tax avoidance the European Union claims to be trying to stop,” he explained.
Stating that the activities of Luxembourg, Ireland, and the Netherlands were common knowledge for decades, but the European Union was only compelled to investigate after the public outcry that followed press reports, Persaud said “blatant discrimination doesn’t reduce tax avoidance; it shifts it”.
“The European Union’s actions would make former FIFA vice president Jack Warner blush: be thick in the middle of hundreds of deals avoiding billions of taxes, then accuse Niue, a Pacific island state with a GDP of $10 million, as a major threat to the tax receipts of European governments. Jean-Claude Juncker, president of the EU Commission, was prime minister of Luxembourg when the tax deals were being developed. He has adopted the Warner defense: ‘I have nothing to reproach myself more than others would have to reproach themselves’ Incidentally, FIFA, under investigation for corruption and bribery, is headquartered in Switzerland, another country that does not appear on the EU list. The European Union is saying that Swiss activities are far less a threat to EU tax revenues than those that take place in Niue, Montserrat, Liberia, Vanuatu, St. Vincent, St. Kitts, and the Cook Islands,” said Persaud.