Luxembourg & One-Sided TIEA News Coverage
July 14th, 2009
July 14th, 2009
Many outlets reported on the fact that Luxembourg has now signed 12 OECD model Tax Information Exchange Agreements (TIEA). However, all of these articles cover only one side of the story – touting the signing of the agreement, the OECD’s lauding of Luxembourg, and the Luxembourg’s self lauding for coming into “compliance.” If you weren’t careful, you might mistake the articles for something written by a mother who is bragging about the accomplishments of her own child.
But there is an entirely separate side to this story that hasn’t permeated the coverage at all: the OECD standards are useless in any practical sense, and under these standards wealthy tax evaders will still feel perfectly safe stashing their money in Luxembourg. As we discuss extensively on this website – the OECD’s standards require a tax haven to share a specific person’s bank account information with another country only if the requesting country can prove to Luxembourg that a certain person is evading taxes in the requesting country. In short, as international tax law expert Jack Blum puts it, “If you have the information, we’ll give it to you.” Of course, if you have the information, then you no longer need it, which is why we advocate a system of automatic exchange of tax information. (My friend, Nick Shaxson at TJN goes deeper into Luxembourg’s specific shortcomings in this post).
Nevertheless, there hasn’t been single mention of this caveat in any of the news coverage about Luxembourg’s TIEAs. Indeed, save one Washington Post article, the mediocre coverage of the Luxembourg situation is sadly only emblematic of the news coverage surrounding TIEAs and the OECD’s grey-list in general.
It’s about time the news media cover both sides of this story rather than blindly buy into Luxembourg and other tax haven’s public relations campaigns. This is a serious issue which costs developing countries in the hundreds of billions (if not trillions) of dollars each year – condemning many people to poverty – enables terrorist financing, and creates a shadow financial system which brought about the biggest financial crisis since the great depression. It’s time we had serious coverage.