Perhaps the most promising opportunity to expand fiscal space is briefly summarized in Isabel et al.'s paper: "In addition to altering corporate tax rates, governments can also increase fiscal space by taking concerted actions to minimize tax evasion and/or aggressive avoidance of taxes on the part of large companies. Transnational corporations, in particular, commonly shift profits and losses around the world so that they are recorded in different jurisdictions in order to minimize overall tax liabilities. Such practices are difficult to track, but estimates suggest that total lost revenues could amount to US$ 50 billion per year among developing countries (Cobham 2005). Proposals have been put forward to increase the transparency of transnational corporations and hold them accountable for their tax obligations, such as reporting profits, losses and taxes paid in each location where the company does business (see section 6 on illicit financial flows for details)."
Through a collaboration among Global Financial Integrity, Academics Stand Against Poverty and the Friedrich Ebert Foundation, we are trying to build continent-wide networks of experts and advocates in the developing world to fight the scourge of tax evasion and associated illicit outflows of capital. The first of these large conference, focused on Africa, will take place at the University of Johannesburg next week: May 18-20. See www.gfintegrity.org/event/fostering-greater-national-and-regional-economic-opportunity-in-africa-through-human-rights-and-financial-transparency/. Tax evasion is very much on the international political agenda. Let's make sure that any new initiatives include the poorer countries as well.
Leitner Professor of Philosophy and International Affairs
Yale University, PO Box 208306, New Haven, CT 06520-8306