Gabriel Zucman’s “The hidden wealth of nations”, said to be the most comprehensive study on tax evasion, estimates that 8% of global financial wealth is held in tax havens. Poorer countries suffer the biggest loss with 20-30% of wealth held offshore for many African and Latin American countries compared to 10% for Europe and 4% for the US. Zucman is very critical of attempts made so far to counter tax dodging and proposes a new approach based on (i) financial/commercial sanctions against key uncooperative players (e.g., Switzerland, Luxembourg and the Virgin Islands) and (ii) the creation of an automatic global wealth registry accessible to national tax authorities for verification purposes. Being Piketty’s protégé, Zucman also suggests that such global financial registry could be used in combination with real estate registries to impose a global tax on wealth stocks. The final chapter of the book on corporate tax avoidance points the finger at US firms accounting for more than half of the global problem ($130 vs $240 billion per year). Very critical, again, of existing countering initiatives (e.g., by OECD & G20), Zucman calls for focusing corporate taxation on the consolidated profits of firms at the global level. Many have called Zucman “utopian” but what I found most interesting is that his book contributes to bringing tax avoidance – once an expert- or activist-type issue only – into the mainstream. Podcast suggestion here (1h18’).
Ban Ki Moon’s “One humanity: Shared responsibility”, setting the stage for the World Humanitarian Summit, came out this week. Pundits are offering summaries and analyses. And here are the take-aways of our colleague Emily Garin who read it for us: The report does a great job of laying out the myriad challenges that need to be tackled, though it (perhaps understandably?) doesn’t break much new ground in terms of grand solutions. The hundred-odd recommendations contained throughout are helpfully summarized here. The big missing piece, however, is a compelling vision for the added value of the UN in the midst of these problems and solutions. The report rightly accepts the oft-repeated call for more investment in national systems and local actors, but simultaneously fails to make the case for the distinct role that only UN agencies are or should be playing. As our donors and partners look more closely at bottom lines and value-for-money, what is our answer to this increasingly common question?
My graph of the week is from Chris Hoy’s “Can developing countries afford the SDGs?” which compares the price tags of 3 SDG targets (poverty, health, and education) with the public finance capacity (government revenue + ODA) of low income (LICs) and lower middle income countries (LMICs). It shows that most LICs cannot afford the SDGs. For the Democratic Republic of Congo, the cost of reaching these targets equals the national GDP. But Hoy also shows that most LMICs could cover SDG costs with government revenue only. So his recommendation is for donors to redirect ODA from LMICs to LICs. This is going against the latest ODA trends.
Two quotes this week as I could not make up my mind. One from Kimberly Bryant and Kim-Mai Cutler at the 9th Annual Crunchies: “… and the Crunchie [for biggest social impact] goes to … Code.Org !”.
And one from Prof. David Reitze: “We have detected gravitational waves. It’s the first time the Universe has spoken to us through gravitational waves. Up until now, we’ve been deaf.”