Introducing the Rules

Dear friends,

Introducing The Rules

We’d like to introduce you to /The Rules, a new global movement to change the rules that create inequality and poverty around the world.

Our launch campaign aims to highlight the systemic damage caused by tax havens and focuses on the City of London as the center of the web. We’d like you to be among the first to participate:

Dear UK: Stop stealing the world’s wealth

Tax havens are hiding over 21 trillion US dollars from governments and the public around the world. UK Prime Minister David Cameron has the chance to deal a powerful blow to this corrupt system but without public pressure, the loudest voices he will hear are those of the powerful financial sector. It will take a massive global show of outrage but with your help our voices can drown out the big banks, and strike at the heart of the global tax haven network.

Call on UK Prime Minister David Cameron to remove the secrecy that lets the City of London operate as one of the world's biggest tax havens.

We’ve also published a kickoff article in Al Jazeera, which we hope you will read and share widely with your networks.

Please contact us at info@therules.org if you have any feedback, especially as it relates to our launch campaign.

Let’s work together to change the rules! And that’s how we’ll start to change the world…

Thank you,

/The Rules team

www.therules.org

@therulesorg

http://www.facebook.com/therules.org

We have the power to change the rules

Tax havens are allowing a "tiny global elite" to "extract trillions of dollars" from rich and poor countries alike The ancient Mayan civilisation's Long Count calendar ends in December 2012. This fact has sparked debate in recent years about whether our generation was the one that would experience humanity's final days. Whatever your reading of that debate, you certainly don't need to look far today for evidence that the human race is in serious trouble. But amidst all the grim realities, there are also significant signs of hope: signs pointing to new opportunities for positive, lasting change. In recent years, we saw dictatorships toppled across North Africa and the Middle East. There was hope that nations could chart a common course to tackle climate change. We seemed on the verge of reining in the unchecked greed of the banking system. Back in 2008, America surprised the world by electing a black president to the White House. Yet cynicism can so quickly fill the space where hope had bloomed. In nations where dictators were toppled, old elites reassert their power. Today, while the warming oceans rise, even the prospect of a global climate plan is beyond the horizon. While there are fewer banks now, they are richer and more powerful than ever before. A black president has been re-elected, but financial elites have never had more of a stranglehold on American priorities. The greatest hope for progress on such vast challenges is in the democratic impulse now taking shape in many nations. Coordinated movements of ordinary citizens have emerged as a major force from Tahrir Square to Wall Street. Across the world we are seeing millions of ordinary people joining citizen-powered movements, determined to overwhelm the power of entrenched elites. They are harnessing new technologies and social networks and seeing themselves as the agents of change. These movements are still half-formed and often flawed, but they are getting stronger. Changing the rules The challenge now is for these new movements to grow, to work together and to focus their energies. Lasting change requires more than overthrowing a dictator or firing a few CEOs. It requires changing the rules themselves - the national and international laws, policies and practices that allow injustices to endure while regimes rise and fall. The rules as they stand today have created a world in which inequality is vast and growing. The world's 1,226 billionaires have more combined wealth than 3.5 billion people - half the entire planet's population. The richest 10 per cent of the world's population takes 90 per cent of the world's income. "The world's 1,226 billionaires have more combined wealth than 3.5 billion people - half the entire planet's population." The scale of inequality and poverty can appear overwhelming and unchangeable. Yet it is not inevitable. It is the outcome of active choices by people who make and enforce the rules we all live by: rules about global trade, banking, loans, investment, taxes, working conditions, land, food, health and education. These rules are made by people and people can change them. Frederick Douglass, a leader of the 19th century abolitionist movement which brought an end to slavery, once said, "Power concedes nothing without a demand". If we want to change rules that have been written by the few and for the few, we must look outside existing power structures to the power of the many. We know from history that when people demand their rights, they can move mountains and change whole systems. Right now, there is a special moment of opportunity. Throughout the world, citizens have access to information in ways once unimaginable. Affordable technologies are revolutionising our ability to communicate with one another and act collectively. The opportunities for new citizen-powered movements to become catalysts for change have never been greater than today. Powerful elites are losing the structural advantages they once enjoyed of being able to maintain secrecy, restrict information and suppress popular movements. Offshore tax havens This month, we are launching a new platform called /The Rules, to help mobilise action by ordinary citizens around the world to challenge and change the rules - the most basic drivers of inequality and poverty. We have a special focus on organising with people and grassroots movements in countries such as Brazil, India, Kenya and South Africa. We are creating new ways for people to speak up using simple, cheap technologies like basic mobile phones. The first campaign for /The Rules will target the system of offshore tax havens, starting with one of the biggest and most connected of all, the City of London. Tax havens are the product of rules that have been rigged by powerful corporations, lobbyists, lawyers, bankers, accountants and government officials. They are allowing a tiny global elite to extract trillions of dollars from rich and poor countries alike, starving our nations' treasuries and choking off funds essential for schools, medicines, social programmes and infrastructure. New research has blown the lid on this secretive shadow economy, with at least $21 trillion estimated to have been stowed away in these tax havens - 10 per cent of all the world's privately held wealth. This is also more than 10 times the total value of development aid given to the world's poorer nations in the past 20 years. The few who benefit from these rigged rules will fight long and hard to preserve them, but they can be defeated. Rules express and entrench much of the injustice in our world today. But rules can be changed and the opportunity to make those changes has never been greater. Instruments of power once only in the hands of elites are now available to ordinary citizens - and we are beginning to use them. That gives us reason for hope. This article was written by founding members of /The Rules, including: Alnoor Ladha is an activist and social entrepreneur. He is a co-founder of /The Rules, a citizen powered movement to address the root causes of poverty and inequality. He is also a Partner and the Head of Strategy at Purpose, an incubator for new types of social movements, and currently a Board Member of Greenpeace International USA. Follow him on Twitter: @alnoorladha Firoze Manji is the founder and former editor-in-chief of Pambazuka News and founder and former executive director of Fahamu - Networks for Social Justice. He is a visiting fellow at Kellogg College, University of Oxford, and an associate fellow of the Institute for Policy Studies, Washington. Follow him on Twitter: @firozem Thomas Pogge is Leitner Professor of Philosophy and International Affairs at Yale. He is President of Academics Stand Against Poverty (ASAP), an international network aiming to enhance the impact of scholars, teachers and students on global poverty. Having received his PhD in philosophy from Harvard, Pogge is also involved in a team effort toward developing a complement to the pharmaceutical patent regime that would improve access to advanced medicines for poor patients worldwide. The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy. Source: Al Jazeera http://www.aljazeera.com/indepth/opinion/2012/11/20121126134721926547.html

Join the Afritax Google Group Today

Join the Afritax Google Group Today

For the latest updates in taxation, the extractives industry and economic justice issues, subscribe to the Afritax Google group.

This is the mailing list for Tax Justice Network-Africa (TJN-A).
Afritax aims to facilitate discussion on Taxation in Africa by encouraging debate on sustainable development through pro poor Tax policies, highlighting the links between Tax policies and Development in Africa, and tackling of harmful Tax practice that encourage resource outflow from the continent.
You are most welcome to send posts and participate in discussions.
You can view previous posts on the group by following this linkhttps://groups.google.com/group/afritax
View our website http://www.taxjusticeafrica.net/

Uncovering the secrets of international finance: Tax Havens

Tax Havens - Investigating International Finance - Episode 1

This is the first in a series of 4 videos investigating different areas of the international finance system. Each is a short introduction to a major challenge we face if we want to reform global finance and make it work for people and the planet. Millions of individuals have been adversely affected by the risky practices of financial institutions, but their operations remain shrouded in mystery. This is one of the biggest barriers to reforming global finance – not enough people understand how it works. 

Today's first film focuses on tax havens. Used by wealthy individuals and comhttp://www.youtube.com/watch?v=3I-RVVa6mKcpanies to shift huge sums of money around the world in secret, they cost governments and ordinary taxpayers billions of pounds. International efforts to tackle tax havens to date have been feeble, but there is no reason why proper action can't be taken - watch the video to find out what can be done.

The last few years have shown what can happen when the finance system goes wrong - to ensure global financial stability, now is the time to expose the system's murky secrets.

Tricks of the global financial elite

Tricks of the global financial elitehttp://www.presstv.ir/detail/2012/12/05/276239/tricks-of-global-financial-elite/

There are no limits to the tricks of the global financial elite.

Bolstered by university academics who piously announce that whatever the elite does must be for the benefit of everybody else; toadied to by politicians who are but paid catamites; and secure in the knowledge that the public will never understand what it is not allowed to see, the elite is engaged in a gigantic rip-off. 

The rip-off starts with the academics claiming that an international corporation helps everybody because a corporation’s profits, in some mysterious way, ‘trickle down’ to the population in general. 

This is an egregious lie. 

The lie has three aspects. For a start, the rich never spend all their earnings. 

Secondly, the real benefit of an economic operation is the very considerable spending power which comes from the jobs of the workers. But what happens if these jobs have been exported by the international corporation, as has happened on a massive scale in the USA? The spending power then stays abroad and cannot be used to buy the admittedly cheaper goods being imported. The argument that the imported goods are cheaper is a cunning one because it ignores the destruction of the domestic spending power as well as the long-term effects of exporting all the skills and technology. Henry Ford, of motor car fame, understood that his workers had to be paid well if they were to be able to buy Ford cars. Unemployed people are not paid at all. 

Today’s elite, however, does not care if the USA’s millions of ex-workers have nothing with which to buy the cheap imported goods. If the American market can no longer buy, the international corporations cheerfully reflect that they have established themselves abroad and can take advantage of the expanding local markets. As far as the global elite is concerned, Americans can go hang themselves. 

But the third aspect of the lie is even more startling. Even when it is operating within, for example, the USA or the UK, the global elite is busily ripping off the economic wealth of a country into tax havens abroad (and so onwards into the pockets of the elite). It is able to do this in several ways particularly by setting up brass-plate corporations which are physically small, perhaps only a desk and computer, but through which millions of dollars can flow. The brass-plate corporation, owned by an international corporation, then buys and sells, or receives income, at any rate that its international corporation owner wants by a method called ‘transfer pricing.’

Transfer pricing refers to the usually completely false setting of charges made between related parties (such as brass-plate corporations and their international corporation owners) for goods, services, or use of property (including intangible property such as a trade mark or name). In short, transfer pricing is a fiddle on the global scale and, in this way, the economic wealth created by the corporation ends up in the brass-plate corporation in a tax haven or, more likely, in another brass-plate corporation in another tax haven where the local tax rate is even lower. 

Now consider some of the facts in the UK. In 2011, Starbucks, the chain of coffee shops, had profits of about £60 million but paid not one penny in tax. It also paid abroad a huge, unreasonable, amount for the use of the Starbuck name. 

Google paid £6 million in tax recorded turnover of about £400 million when the true figure was at least six times higher. Tax loss to the UK was about £240 million. 

Top criminal (of those who are known) was Amazon.uk which paid £1.8 million tax on a reported turnover of £207 million when the true turnover was £3.3 billion i.e., sixteen times higher. 

The multinational corporations use deceitful practices, and exploit the current legislation and lax atmosphere, to move off-shore profits which are clearly generated from economic activity in the UK. 

A UK House of Commons committee questioned executives from Starbucks, Amazon and Google and found them to be “evasive” and “completely lacking in transparency.” This is House of Commons-speak for lying about a colossal organised fraud. 

Yet the politicians are also complicit. For a start they have long welcomed the system of transfer pricing and off-shore tax havens from which, as individuals, they undoubtedly benefit. And that explains why the UK tax authorities have been lax in scrutinising and tightening the tax system and its detailed administration. 

But there’s an even bigger fraud behind all this, namely, present international banking practice which increases the frauds of the financial elite. People think that the international banks lend existing money e.g., the bank’s capital or the deposits of customers. Yet they do not. They create out of nothing (merely by pressing computer buttons) the money they lend and then add interest as well as administration cost. 

The interest (as distinct from the genuine administration cost) is in effect a colossal tax so that estimates are that 30-35% of the price of every good or service is the cost of interest. Some estimates are even higher. Governments are in ever-increasing debt because the global elite, assisted by compliant politicians, says that money (borrowed at compound interest) must always come from the commercial banks when, in reality, it could easily be borrowed, interest-free, from a national bank. 

Then, when the governments cannot pay, the elite insists that there be “austerity” thereby smashing jobs, pensions and lives, to pay back the loans. And please notice that even though the physical assets of land, factories, people and technology are still in existence, everybody’s standard of living is forced to collapse so that the elite can be paid back at interest something they created out of nothing. All the time, of course, there are vague, ever-receding promises that things will get better in the far-off future (when they are getting worse), and all this happens because the global elite has got a stranglehold over the thinking in the universities and easily slips money into the pockets of the politicians. 

Unless the general public wakes up and sets off an intellectual and political revolt, it will find that it has been tricked it into a deep, debt peonage (out of which it will never be able to break) accompanied by a vicious political and social repression. 

A Visiting Professor of Binary Economics at Trisakti University, Jakarta, Indonesia, Rodney Shakespeare is a Cambridge MA, a qualified UK Barrister, a co-founder of the Global Justice Movement www.globaljusticemovement.net, a member of the Christian Council for Monetary Justice. His main website is www.binaryeconomics.net. Shakespeare is also Chair of the Committee Against Torture in Bahrain. More articles by Rodney Shakespeare

Tax dodging is a 'moral issue' that hits those with least, says Christian Aid

Christian Aid has welcomed a House of Commons committee’s report on tax dodging by multinationals, which puts morality at the heart of the tax debate.

The UK-based development agency says the harm the practice of tax avoidance causes to developing countries and poor communities should be seen in the same light.

Parliamentary spending watchdog the Public Accounts Committee highlighted yseterday ( 3 December 2012) how multinationals minimised corporation tax on the profits made in the UK by exploiting national and international tax structures.

The committee said the evidence it heard from multinationals and HM Revenue & Customs about how successful companies "with huge operations" in the UK could pay so little tax "was unconvincing, and in some cases evasive."

Calling for reforms in the way multinationals are allowed to order their finances to minimise tax, the committee said: "there is a moral case on top of the basic economic case that taxation of economic activity should transparently reflect where that activity occurs."

Christian Aid’s senior economic justice adviser Joseph Stead said yesterday: "The report drew welcome attention to the impact of tax dodging by multinationals in the UK, where the picture is bad enough. It is, however, a great deal worse in developing countries."

Tax dodging is a 'moral issue' that hits those with least, says Christian Aidhttp://www.ekklesia.co.uk/node/17531

"Christian Aid estimates that tax dodging by multinationals and other businesses trading across borders in poorer countries which lack the expertise and revenue capacity to fight back costs the exchequers of those countries around US$160bn a year, nearly one and half times what they receive in aid," he continued.

"In recent years the opportunities for companies to be legally compliant while contravening the spirit of the law have proliferated. We are extremely pleased that the committee has agreed that such behaviour, while it might be legal, contravenes the spirit of the law, is immoral and needs to be countered," said the Christian Aid spokesperson.

The report, Mr Stead added, came only weeks after the House of Commons International Development Committee called on the UK to lead the global fight against tax dodging by multinationals in the developing world.

That committee highlighted effective tax collection as vital in helping poor countries escape aid dependency and poverty, and said requiring multinationals to report their accounts on a country-by-country basis would make it easier to spot anomalies.

At present multinationals can hide their activities in particular jurisdictions as they are only required to submit consolidated global accounts, not individual accounts for their subsidiaries.

Mr Stead added: "Chair of the Public Accounts Committee Margaret Hodge called today for multinationals to report their tax practices transparently, and pay an appropriate amount where they make their profits to reflect those profits. The way to make that happen is to introduce country by country reporting.

"In responding last month to the International Development Committee’s report, the Government ignored that key recommendation. We urge it now to abandon that stance.

"The Prime Minister has said that the G8 will address tax and transparency, with these two committees showing how important this is for developed and developing countries alike.

"The G8 needs to fight the secrecy inherent tax havens, which allows tax-dodging multinationals to hide profits away from public scrutiny. We urge the UK to use its influence when chairing the G8 next year to reform the rules that allow tax havens to facilitate tax dodging on a vast scale," he concluded.

IMF Halts Congo Loans Over Failure to Publish Mine Contract

IMF Halts Congo Loans Over Failure to Publish Mine Contract

The International Monetary Fund said it halted the Democratic Republic of Congo’s $532 million, three-year loan program after the government failed to publish details of a 2011 mining deal.

The lender, based in Washington, had asked the government make public the contract for the June 2011 sale by state-owned copper miner Gecamines of its 25 percent in the Comide Sprl copper project to a British Virgin Islands company called Straker International Corp. The government only published notes on the sale, which the IMF deemed insufficient, Oscar Melhado, the IMF’s resident representative in Congo, said in a phone interview today from the capital, Kinshasa.

“We applied the concept of strict conditionality because we believe that transparency in the mining sector is key for the country,” he said. Congo will lose out on three loan disbursements worth a total of about $225 million, he said.

Congo, a Central African nation the size of Western Europe with a population of about 68 million people, is the world’s poorest country with per capita gross domestic product of $349, according to IMF data. The United Nations Development Programme ranked Congo the least-developed country in the world last year and it remains near the bottom of Transparency International’s Corruption Perceptions Index.

Dan Gertler

Eurasian Natural Resources Corp. (ENRC), listed in London, became Comide’s biggest shareholder in 2010, when it purchased 50.5 percent of Camrose Resources Ltd. from Dan Gertler, an Israeli mining investor who still owns part of the project.

Mining began in November 2011 at the site, which has reserves of 10 million metric tons of copper at a grade of 1.77 percent, and total resources of 34.7 million tons of copper with an average grade of 2.02 percent copper and 0.23 percent cobalt, according to ENRC.

Mines Minister Martin Kabwelulu said the government had published all the information the IMF requested about the project and called its decision to halt the loan program “unconsidered.” The Comide deal resolved “old litigation” between Comide’s partners and the government had no part in it, he said in a mobile-phone text message today.

“It’s regrettable that this program was canceled in this manner,” Kabwelulu said.

The funds from the IMF loan were to be used to shore up Congo’s foreign-exchange reserves. Under the terms of its accord with the IMF, the government agreed to publish all contracts related to oil, mining and forestry to improve transparency in its revenue collection from those industries.

Request for Extension

According to the note on the sale published on the Mines Ministry’s website on Nov. 21, Gecamines undertook the Comide deal to resolve “a technical litigation,” the ministries said, without explaining the term. Straker didn’t pay Gecamines for the stake, according to the note.

Gecamines may receive 25 percent in another mining company, Goma Mining Sprl, in return for its shareholding in Comide. As part of the arrangement, Goma Mining took over part of a Comide mining permit as well, according to the note. Goma Mining already has another permit adjacent to Comide.

The note didn’t say who owns Straker International or Goma Mining. ENRC said Goma Mining wasn’t related to Comide, according to a statement e-mailed by the company’s external communications agency Nov. 29.

130 Contracts

Melhado said Congo previously published more than 130 contracts under agreements with the IMF and World Bank. In May 2011, the government also signed a decree requiring that contracts for any cession, sale, or rental of the state’s natural resources to be made public within 60 days of their execution.

Congo had asked the IMF for a sixth-month extension to complete the program, which was set to expire Dec. 10, according to Melhado. The fund denied the request because of the problems with the Comide contract and because it wouldn’t provide enough time to reform Congo’s state-owned companies, he said.

“The extension for six months was not enough for all the reforms that we’d like to support the government to implement, particularly in the domain of reform of key public enterprises, and in particular Gecamines,” he said. “On the side of the IMF we are ready to re-engage immediately if we are requested by the DRC’s government.”

Gecamines’ sale to Straker came to light in May through a copy of Comide’s board minutes obtained by Bloomberg.

To contact the reporter on this story: Michael J. Kavanagh in Goma atmkavanagh9@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.nethttp://www.bloomberg.com/news/2012-12-03/imf-halts-congo-loans-over-failure-to-publish-mine-contract-2-.html