The UN panel on financial integrity for sustainable development urged governments to overhaultax rules and the banking system to help end poverty and tackle the climate emergency.
It said up to 10% of the world’s wealth could be hidden offshore at a time when governmentswere under growing financial strain because of the Covid pandemic, and as inequality soars.
The panel of world leaders, central bank governors and business and civil society representativessaid criminals were laundering assets worth as much as 2.7% of global GDP each year.
They said it was an alarming testament to the way the international financial system was skewed in favour of the wealthy, that even during a pandemic billionaires’ wealth had increased by 27.5% between April and July last year when the rest of the world had been plunged into turmoil.
In its final report, the high-level panel on international financial accountability, transparency andintegrity (Facti) says greater coordination between countries is required to impose sanctions onenablers of financial crime.
Ibrahim Mayaki, the co-chair of the panel and former prime minister of Niger, said: “Closingloopholes that allow money laundering, corruption and tax abuse and stopping bankers,accountants and lawyers from enabling crime are steps in transforming the global economy forthe universal good.”
The report calls for an international minimum corporate tax rate, more progress towards taxingdigital companies and measures to improve the transparency of company ownership and publicspending.
It says an agreed minimum tax rate of 20-30% on company profits would help limit incentivesfor multinational companies to shift profits made in one part of the world to a lower-taxjurisdiction, and prevent a “race to the bottom” between countries.
Instigated by George Osborne after the 2008 financial crisis, the UK has steadily cut the rate ofcorporation tax to 19%, among the lowest in the advanced world. However, the government isthought to be considering raising the tax rate.
Ireland’s corporate tax rate is 12.5%. Several UK overseas territories and crown dependencies, including the British Virgin Islands, Guernsey and Jersey, have a zero corporation tax rate.
The demands for tougher global action on tax avoidance and evasion comes as the coronaviruspandemic blows a hole in the public finances of governments around the world, amid a boom inemergency spending and collapse in economic activity.
The Facti report says recovering losses to tax avoidance and evasion could help countries such asBangladesh expand its social safety net to 9 million more elderly, in Chad it could pay for 38,000classrooms, and in Germany it could build 8,000 wind turbines.
Dalia Grybauskaitė, the co-chair of Facti and former president of Lithuania, said: “Our reportrests on two simple ideas: restore public finance by fixing a broken system and use the trillionsof dollars released to eradicate poverty, recover from Covid and tackle the climate crisis.”