The results, revealed on Tuesday by the international research initiative More in Common, found that a significant majority of the population in the U.S., U.K., Germany, France, the Netherlands, Italy, and Poland think that corporate bailout funds should be reserved for actors that pay taxes.
Experts and civil society organizations weighed in on the findings, and suggested policies that could effectively satisfy public opinion.
The U.S. and the U.K. had the highest level of support for the idea, with 94 and 95 percent of the population respectively agreeing that companies should not be bailed out if they are not paying taxes in their home country. Even the lowest level of support recorded in the Netherlands reached 87 percent.
“These polling figures, from country after country, confirm the public’s great anger at the scale of corporate tax abuse by multinational companies, and the cost to public revenues,” said Rosa Pavanelli, General Secretary of Public Services International, a global trade union federation.
“This is a direct contributing factor to the shocking underfunding of our public services, which the COVID-19 pandemic has fully exposed. Policymakers must act urgently to stem these losses and support public services – and that starts with simply requiring tax transparency from these companies, many of which are now seeking access to public funds,” she said.
As reported previously by OCCRP, the European Commission launched a proposal in July recommending that its member states avoid allocating public resources to companies linked to tax havens. At this point, Denmark and Poland had already adopted similar measures.
A significant deficiency, experts noted, is that the policy did not encompass the more comprehensive definition of a ‘tax haven’ given that it was based on the blacklist of non-cooperative tax jurisdictions that were made by the European Union itself, which does not place any of its own member states on the list.
This policy does not, for instance, deter any company receiving coronavirus bailouts from booking their profits in Luxembourg, the Netherlands, Switzerland and the UK, which the Tax Justice Network refers to as “the axis of tax avoidance” – jurisdictions from which the EU loses a total of $27 billion in corporate tax every year from U.S. multinationals alone.
When OCCRP contacted the civil society organization about this issue, Mark Bou Mansour, its communications coordinator, said that governments should instead rely on its 5-step bailout plan, which is “designed to help governments make sure bailout funds go to saving jobs instead of towards tax havens.”
Rather than using the EU blacklist, he explained, his organization has advised governments to consult its Corporate Tax Haven Index and Financial Secrecy Index, which is based on the view that “there is a spectrum of behaviors, rather than a simple division between ‘good’ and ‘bad’ jurisdictions.”
Prem Sikka, Emeritus Professor of Accounting at the University of Essex told OCCRP that he agreed that the EU tax haven blacklist is not as good for directing policy that would appease public opinion, given that it excludes European tax havens.
The Tax Justice Financial Secrecy Index, he said, “provides a better framework as it takes account of secrecy and quality of accountability and regulation.”
“These are the key ingredients of secrecy, which is a key requirement for illicit financial flows facilitated by some countries,” he explained.
The professor, whose research focuses on the auditing industry, tax avoidance, corporate governance, and corporate social responsibility, outlined a series of suggestions for how governments could implement conditions attached to coronavirus aid that “would not be dependent on any universal definition of tax havens.”
Any government offering financial aid to companies, he said, should require that they publish their tax returns for each jurisdiction of their operations over the last five years, and that they should also demonstrate how much in corporate taxes they paid.
Additionally, he suggested the requirement to have companies "publish their tax avoidance strategy for the last five years, together with the advice received from accountants, lawyers and other advisers,” and that they should also show that “all intragroup transactions, related party transactions and transfer pricing games, which are key elements of profit shifting, have been ended.”
If companies requesting financial assistance were found to have avoided their tax burdens, Sikka concluded that governments ought to demand a repayment, which could be given back in a series of instalments. They should also “demand explicit evidence and a written agreement to ensure that specific offshore operations have been repatriated,” he said.
