Tax avoidance and evasion increase economic inequality and distort economies, especially in low-income countries. These are first-order problems for policymakers to address, but to do so requires accurate and reliable data on the scale of the problem to track monitor progress.
The TJN has been a leading organising in producing research into the scale and scope of the offshore economy. Our ground-breaking report ‘the price of offshore’, authored by James Henry, a former chief economist for McKinsey, was the first comprehensive study of the assets held by offshore jurisdictions. It estimated that between $21-32 trillion is stashed offshore.
More recently, we have published reports on the scale of profit shifting by US multinationals, which for the first time sought to detail the impacts on individual countries of tax avoidance by US firms. That study built on work by the IMF which found an estimated $660bn of corporate profits were shifted in 2012 — or more than a quarter of US multinationals’ gross profits , sum equivalent to 0.9% of world GDP.
Looking forward, the TJN’s work in this area will support global commitments to track and/or curtail the scale of tax injustice. This includes the adoption of meaningful tax evasion and tax avoidance indicators in the Sustainable Development Goals and effective, public tracking of profit shifting through the BEPS process and other avenues.
One main output of the scale of tax injustice programme will be a series of openly published papers, critically analysing the current state of knowledge in respect of the leading global and national-level estimates of scale and tax losses due to illicit financial flows.
Crucially for policy outcomes, this will provide a systematic evidence base for the UN agencies working on indicators for SDG 16.4, and for advocacy around the establishment of a globally representative, intergovernmental tax body – demonstrating the scale and pervasiveness of the phenomena, and shedding further light on the particular exposure of lower-income countries. It will, finally, also set the path for further research to ensure more robust estimates with more specific implications for policy.
The other main research focus will be the first, open database of multinationals’ country-by-country reporting. The aim is to establish this – and the associated set of tools – as a valuable part of the open data infrastructure, a key tool for researchers, activists and journalists, and over time, as the obvious place for more transparent multinationals to choose to report.
Alex Cobham is our director leading the scale of injustice programe.
You can contact Alex by emailing Alex [at] taxjustice.net