A thousand billion dollars, or nearly 950 billion euros. The sum is staggering, equivalent to the gross domestic product of Denmark and Belgium combined. It corresponds to the profits that the world’s large companies transferred to tax havens in 2022 alone, according to the report on global tax evasion, published Monday October 23 by the European Tax Observatory. And the efforts of States to better tax multinationals in the future may not fundamentally change the situation.
Hosted by the Paris School of Economics, created in March 2021 and co-funded by the European Commission, the observatory delivers here the fruit of unprecedented work carried out by more than a hundred researchers around the world. His ambition: “take stock of the progress made in the fight against tax evasion over the past ten years and what remains to be done”summarizes the economist Gabriel Zucman, its director.
The subject is hotter than ever. While the pandemic has widened inequalities and public deficits, States are now exploring all avenues to replenish public coffers and respond to a dual emergency: supporting households in the face of the inflationary shock linked to international tensions, and providing resources to finance the energy transition. “If citizens don’t believe that everyone pays their fair share of taxes – especially the rich and big businesses – they will start to reject taxes,” underlines Joseph Stiglitz, 2001 Nobel Prize winner in economics, in the introduction to the report. At the risk of harm “to the proper functioning of our democracy, weakens confidence in our institutions and erodes the social contract”.
“Good, bad and very bad”
In the big picture drawn up by the authors, there is “good, bad and very bad”, summarizes Gabriel Zucman. THE ” Good “, first: offshore tax evasion by wealthy individuals – namely bank deposits, shares and other financial securities held abroad and undeclared – has fallen significantly, thanks to the automatic exchange of banking information established, in 2017, in around a hundred countries. In detail, offshore wealth is estimated at $12,000 billion in 2022, or 12% of global GDP. Today, a quarter of this wealth is not declared to the tax authorities – and therefore escapes taxes – compared to more than 90% in 2007. “This shows that rapid progress can be made when there is political will to do so,” welcome the authors.
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