KrF, Venstre and Sp do not want transparency

Once upon a time there was a Government that did not want transparency…

The Panama Papers, Lux Leaks, Swiss Leaks, and Paradise Papers revealed that commercial companies, questionable organizations, and politicians alike choose to organize themselves through tax havens, use layers upon layers of secrecy and financial tools to achieve numerous objectives; control over companies, economic gain from companies, avoidance of taxation and the rule of law.

Most politicians went to the media and shook their heads when the revelations raged in the media. The media focused on the revelations, but there was not much written about how power can be held accountable and what necessary measures can counteract the underlying problem. The case of extended country-by-country reporting has been up for vote in Parliament four times in the last few years.

The Governmental Parties hold the key themselves​

If the government wished to do anything about such secrecy, they hold the key themselves. Now there was a proposal on the table, a tiny adjustment of a current amendment which would make it possible to make transparent where mailbox companies are registered and capital built up.

If the government so desired, it can find out about mailbox companies and capital in tax havens. Clearly, KrF, Venstre, Sp, Høyre, and FrP do not wish to know about this.

Ap, Sv and Mdg set forth a proposal on transparency​

The Standing Committee on Finance and Economic Affairs` members from Ap, Sv and Mdg, on December 12, 2018, submitted a proposal where they ask Parliament to change the amendment on country-by-country reporting. The proposal would ensure that where extended information is required, it will be submitted in accordance with annual accounts and independent of the materiality limit. This is important since it is only then that the amendment for extended country-by-country reporting can work according to its intent. Currently it does not.

That is because when the Ministry of Finance last year accepted PWYP Norway`s demand concerning extended country-by-country reporting (investments, retail income, production volume, and expenses) in the amendment on country-by-country reporting according to the Accounting Act §3, the Ministry of Finance made sure to “lock” this “tax haven section”. In the current amendment it is §4, paragraph 3 which can ensure that information in extended country-by-country reporting emerges from tax havens. But the tax haven section §4, paragraph 3 is trapped behind a padlock called §4, paragraph 2. The purpose of this padlock in §4, paragraph 2 is to control on what terms extended country-by-country reporting must be given. Currently the information in extended country-by-country reporting is not in line with the annual accounting and independent of whether a company has paid taxes in a country or not. In tax havens, companies often pay very little taxes or none at all. This means that companies do not need to report from tax havens currently. The result is that the tax haven section contains the demands of extended country-by-country reporting, but is placed in a Sleeping Beauty slumber in §4, paragraph 3, so that it will effectively not work.

Read: "Tax Haven-regulation in a Sleeping Beauty Slumber​"

Who voted for?​

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Who voted against?​

Read: "Will KrF, Venstre and Sp support Norwegian business by voting for transparency?"

Ap is now for transparency​

In the recommendation a notice was reffered to NRK on March 21 in the news article “Wants new rules for Norwegian companies in tax havens” (in Norwegian) which addresses that several consultative bodies have reacted to the cited materiality limit which allows the companies to circumvent having to report from tax havens, and that there need be no connection to the annual accounting. Among those who reacted were Finans Norge, KLP and Økokrim (Finance Guard), Revisorforeningen (Association of Auditors), Mediebedriftenes Landsforening (Media companies national association) and many more. It also caused Ap to react. Ap`s fiscal spokeswoman Rigmor Aasrud stated to NRK that she “supports the demand from those who want more transparency”.

Do KrF, Venstre, Sp, Høyre and FrP understand the economic consequences for residents by voting against the proposal?

The consequence for Norway is that Norwegian companies risk going bankrupt in the face of unfair tax competition against global companies which can easily move profits around.

The consequence is that the companies that sell their products in Norway are not competing on equal terms as Norwegian companies. So competition on equal terms does not exist.  Norwegian companies get a competition disadvantage. A lack of transparency sets the door wide for unequal information and thereby unequal rights, and unequal opportunities. For industry, information inequality is downright distortive.

The consequence is also that Norwegian tax revenues are reduced. It means that Norwegian residents can expect lower standards and quality in their welfare services in the future.

How much does Norway lose?​

This is, however, one of the most under-investigated areas, precisely because the access to data is so poor. Few economists wish to work in an area where the access to data is so limited.  The most important thing that authorities can do then is to ensure better access to data by voting for the most recent adjustments in the transparency measure extended country-by-country reporting. With extended country-by-country reporting, the basic data for computing tax losses and illegal capital flight would be much improved.

Today PWYP Norway, through board chairman Frian Aarsnes, is participating in a UN workshop in Geneva, Switzerland, to discuss measurements of “total value of inward and outward illicit financial flows” and methodological and technical ways forward in connection with developing statistical concepts for measurements of IFFs in the UN, including those for the SDG indicator 16.4.1. For statistical purposes it would be a gold mine to receive aggregated information of units for each country to obtain consistent global statistics and overview of global structures, and the advantages of implementing extended country-by-country reporting will be conveyed today in the UN.

Transparent residents, veiled companies

The State wants to have complete insight into the economy of residents. At the same time companies are permitted to hide parts of their economy completely from the State. It is difficult for regular residents to understand that authorities will collect from individuals who owe 22 øre in interest claims (in Norwegian) while at the same time multinational companies pay less in taxes than the average employee.  

The transparency requirement is about equality before the law. Transparency is critical for countries built on the principle of equality and the principle that all humans have equal rights and equal opportunities. In order to have equal opportunities, a person must have information – this is true whether there is equal insight into authorities` exercise of their activities, or there are equal opportunities for insight into companies` exercise of their activities.

In order to have sustainable development in the world, it is completely necessary to do something with the problem of tax evasion and the draining of tax revenues within countries. It is crucial for a sustainable development. A sustainable development is contingent upon various factors which are not about aid in the traditional sense, but about financial transparency. Financial transparency is necessary to reduce inequality between and within countries, between national and international companies, and to build peaceful and inclusive societies, as stated by the UN in their sustainability goal 16.4.1. 

The companies influence politics and public services for the residents​

A new report reveals how “the four big” auditing firms influence the UN`s decision makers in among other on topic of tax evasion. More than 200 organizations have witnessed politics and legislation at the UN level and a large number of the member countries. This constitutes a threat against the interest of society and public shared services because the companies` commercial influence have consequences in many political areas for the common people. It has consequences for the standards of public shared services. It has direct economic consequences for regular people when they have to pay taxes, while companies are let off the hook.

What alternatives do regular workers have?​

Alternative 1: Workers take the whole bill for the welfare state themselves. This alternative means increased taxes to maintain the current level of services and quality.

Alternative 2: We can accept much lower supply of welfare services and quality in the future. This alternative means no increased taxes and additional tax cuts.

Alternativ 3: Vi kan kan likebehandle skatteytere. Dette alternativer innebærer at nødvendige justeringer blir gjort i lovverket for å sikre at både arbeidstakere og selskaper bidrar med å betale skatt . Det kan igjen bidra til å vedlikeholde tjenester og den kvaliteten på tjenester som innbyggerne ønsker og skape like konkurransevilkår for selskaper.

Alternative 3: We can treat taxpayers equally. This alternative means that necessary adjustments be done to legislation to ensure that both workers and companies contribute and pay taxes. This can contribute to maintain services and the quality of services that the residents want and create equal competition for the companies.

BACKGROUND:

Read: Voting list divided by party (In Norwegian)