The European Commission has invited comments on the thorny issue of tax evasion and its impact on the European Union (EU), but a Barbados-based economist has not held back in her broadside of Europeans’ actions against Caribbean financial services centres like Barbados.
Marla Dukharan responded to the Europeans’ invitation to comment on its initiative called Tax Evasion and Aggressive Tax Planning in the EU – Tackling the Role of Enablers.
The Trinidadian economist, who calls Barbados home, questioned the self-appointed authority of the EU to blacklist sovereign countries on matters related to taxes and enforcement of anti-money laundering standards.
In her September 30 submission, Dukharan questioned the right of the EU to tell another country’s government what level of taxes it should apply.
“Does the EU not recognise the sovereign right of countries outside the EU to determine their own tax frameworks like those within the EU, such as Ireland and Hungary?
“How is it acceptable for Ireland and Hungary but not small, developing, non-white former European colonies?”
Furthermore, she slammed the EU for being “unfair” and “selective” in the application of its methodology, which she highlighted, was also heavily criticized by global non-governmental organisation OXFAM in 2017.
On the contentious issue of anti-money laundering and counter financing of terrorism (AML/CFT) global standards, Dukharan told the Europeans quite pointedly, they were out of place by assigning to themselves authority they did not have.
“The EU is not the global authority on tax nor AML/CFT compliance. That role belongs to the Organisation for Economic Cooperation and Development (OECD) and the Financial Action Task Force (FATF) respectively by agreement. The EU has unilaterally and indefensibly blacklisted countries which the OECD and the FATF have not.
“On what basis does the EU believe it has the authority to take this action unilaterally, and on what basis does the EU blacklist countries that the legitimate global authorities themselves have cleared?” she questioned
In this connection, she was critical of the grouping, stressing that while the Europeans indicated the adoption of a proportional principal, it still blacklisted countries that even the European Union Parliament says account for less than two per cent of world-wide tax revenue losses.
In fact, in January 2021 the European Parliament in a press statement said it adopted a resolution pushing for the system used to draw up the EU list of tax havens to be changed, as it is currently “confusing and ineffective”.
The European Parliament statement called for changed “that would make the process of listing or delisting a country more transparent, consistent and impartial”.
Moreover, the parliament acknowledged the need for greater examination of European countries also.
“EU member states should also be screened to see if they display any characteristics of a tax haven, and those falling foul should be regarded as tax havens too,” the European Parliament added.
Dukharan also raised serious concerns about the data and methodology being used by the EU in its blacklisting processes.
She pointed out: “In your blacklisting methodology you use the International Monetary Fund’s (IMF) definition of Offshore Financial Centre. In 2008, the IMF produced a list of Offshore Financial Centres, but the IMF “has not used or maintained the list of Offshore Financial Centre since. Why would the EU continue to use this abandoned 2008 IMF list in its scoping criteria in 2020?” (IMC1).
