Guest post: Tax Justice and Lawyers as the Problem and the Solution

John Christensen, Director of the Tax Justice Network, describes how lawyers can be “at the heart” of unjust tax practices, but that the work of many lawyers has been pivotal to the tax justice movement.

John is a speaker on the second module – Finance and Development – on the Law and Development Training Programme, on 19 May 2018. Registration for the Programme is now open, and Early-Bird rates are available until 21 March 2018.

Further details on the Training Programme HERE

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Tax Justice: Lawyers are the Problem and the Solution
John Christensen, Tax Justice Network

Lawyers can be at the heart of many unjust tax practices.  They concoct elaborate and devious tax schemes arbitraging laws from different jurisdictions to enable profits shifting and avoidance schemes that cost governments hundreds of billions every year.  They write legal opinions, frequently of dubious merit, to underpin tax avoidance schemes. They construct and administer complex legal structures spanning many offshore jurisdictions, which enable tax evasion, embezzlement, grand scale looting, escape from creditors, and many other white collar crimes.  As both the Panama Papers and the Paradise Papers have revealed, law firms are at the core of the offshore economy and much of the failure of the current model of globalisation can be attributed to the weak framework of laws, regulations and enforcement procedures needed to prevent criminal elites from using offshore secrecy jurisdictions and tax havens to hide their corrupt activities.

Yet not all lawyers work on the dark side.  Many of the policy proposals being advocated by the global tax justice movement and by anti-corruption campaigners have been conceived, written and promoted by lawyers.  Lawyers have helped the Tax Justice Network to frame its proposals for automatic information exchange between national tax authorities.  Lawyers have been involved in developing our country-by-country reporting standard aimed at requiring multinationals to provide more information to tax authorities. Lawyers have been closely involved in many of the investigations and reporting of offshore crimes. A senior London-based tax barrister wrote a legal opinion for the Tax Justice Network clarifying that company directors do not face a fiduciary duty to avoid tax, overturning a myth that had become ingrained as ‘common-sense’ since the 1980s.

As global and national policy makers struggle to frame a new international settlement that can effectively tackle money-laundering, tax avoidance, cross-border financial crime, and the steady, harmful trend towards tax competition which undermines the ability of states to tax capital, lawyers can play an important part in shaping new laws, new frameworks for international cooperation and a global regime that recognises the need for enhanced commercial transparency.  The poorer countries of the world are the greatest victims of the current order, and they stand to benefit most from the rising tide of tax justice.

*The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of A4ID