Stiglitz’s contribution to the inquiry committee

The need for a fresh “comprehensive, global approach” to tackle tax secrecy, evasion and avoidance

Last week the European Parliament’s inquiry committee on the Panama Papers had an exchange of views with the Nobel prize-winning economist Professor Joseph Stiglitz. Stiglitz was a member of the advisory committee established by the Panamanian government after the Panama Papers scandal. He later resigned because the government refused to ensure the committee’s findings would be published.

The meeting was really useful for the work we are doing in the committee, but also particularly important for us, considering the progressive vision Professor Stiglitz has always been able to propose and inspire.

MEP Sergio Cofferati questions Joseph Stiglitz during Panama Papers hearing

The meeting was the occasion to discuss the proposals of the ‘Overcoming the shadow economy’ report, which Stiglitz wrote with Professor Mark Pieth.

This report includes several recommendations that the S&D Group considers essential, in particular:

1. establishing public country-by-country reporting for multinationals

2. producing public searchable registries of the beneficial owners of each corporation, trust, foundation or other entity

3. ambitious actions to combat tax havens and strong sanctions against intermediaries who facilitate money laundering, tax evasion and avoidance

4. protecting whistleblowers

Furthermore, the report focuses on the necessity of guaranteeing that rules and obligations are fully enforced and applied, and on the need to tackle the complex webs of corporations and trusts, proposing that all legal entities should pay a fee and file a report each year.

Professor Stiglitz highlighted that tax avoidance and money laundering schemes do not concern just Panama but are a global problem and that we urgently need a “comprehensive, global approach” to tackle secret tax structures. He also heavily criticised Trump’s approach to these issues, defining him as the “evader-in-chief” and called on Europe to take the lead in the fight against tax evasion and avoidance.

During the meeting, Stiglitz agreed with several measures proposed by S&D MEPs. He stressed the necessity of including tax conditionality and measures against tax avoidance and evasion in trade agreements, as pointed out by Emmanuel Maurel and Ana Gomes. The professor also agreed with the proposal of Jeppe Kofod, co-rapporteur of the inquiry committee, suggesting a global summit to tackle tax secrecy.

Furthermore, Stiglitz supported the S&D proposals to establish a minimum effective tax rate — outlined in a question from Emmanuel Maurel — and to include the absence of a corporate tax system (or a corporate tax equal or close to zero) into the criteria to be considered in producing a definition of tax havens.

Overall, the meeting was intense and very interesting. It was very welcome that Mr Stiglitz supported many of our proposals and useful to listen to his analysis of the current state of play with regard to tax evasion, avoidance and money laundering, and to his important recommendations. His input will be very valuable for our work in the inquiry committee on Panama Papers.