Tax abuses, poverty and human rights: spotlight on the role of law

Stephen Halsey, Teacher, School of Economics, Finance and Management

Stephen Halsey, Teacher, School of Economics, Finance and Management

Where should the line between legitimate tax avoidance and immoral tax abuse be drawn? What are the responsibilities of governments, corporations and legal professionals in combating tax abuse? Tax revenues lost by the developing world due to tax abuse are estimated at $120bn per annum. This is equivalent to the total amount of aid provided to these countries each year and the situation is worsening. Recovering the lost tax would make a substantial contribution to the alleviation of poverty.

Last week PolicyBristol and the International Bar Association’s Human Rights Institute hosted a high level panel discussion addressing these issues. The event was chaired by Shirley Pouget, Senior Programme Lawyer at the IBAHRI and panellists were:

  • Anders Dalhbeck  Tax Justice Policy Advisor at ActionAid
  • Celia Wells  Head of Bristol University Law School
  • Lloyd Lipsett  Advisor at Shift
  • Thomas Pogge  Director of the Global Justice Program and the Leitner Professor of Philosophy and International Affairs at Yale University
  • Ben Dickinson  Head of the Tax and Development Programme at the Organisation for Economic Co-operation and Development (OECD)

The topic of tax avoidance has been drawing headlines recently on a micro-economic scale (Gary Barlow’s tax activity being an example of a celebrity abusing tax laws) and the matter is becoming increasingly publicised. In discussing the relationship between tax abuses and poverty, the panel argued that the current economic crisis has created a strain on financial policy, felt by members of the public and therefore raising the stature of the issue; they considered that all tax avoidance cases should be viewed as criminal.

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A tale of two taxes

Mike Peacey, Post Graduate Research Student, Centre for Market and Public Organisation

Mike Peacey, Post Graduate Research Student, Centre for Market and Public Organisation

It was the best of times. The UK economy was booming and mortgages could be taken out with a loan-to-value ratio (LTV) of 125%. It was the worst of times. The house price bubble had burst and inaugurated the worst financial crisis since 1929.

Fast forward five years and astonishingly the best of times seem to be coming back. Asset price inflation in the housing market is once again hitting the headlines. It’s no surprise that people want to get on the housing ladder after seeing how well their parents have done. The expectation that house prices will rise faster than other assets has been vindicated by decades of experience.

Many people hoped that the experience of the financial crisis might change these expectations, but recent events suggest this is wrong. Asset price bubbles present policy makers with politically difficult choices – particularly in the conduct of monetary policy.

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