EP Pushes for Further Development Aid

March 29, 2010 International Tax CooperationOffshore BankingOffshore TaxationTax HavensTaxation in EU

EU flag in the Guinness Book of Records 14.04.2009The European Parliament (EP) Member nations have passed a resolution committing to expand their efforts to assist poorer countries. Proposed measures included greater transparency in tax haven jurisdictions, a new tax on financial transactions, sharing of profit from the European Union Emissions Trading System (EUETS), a temporary debt repayment moratorium, and reducing remittance costs.

The European Parliament (EP) passed a tabled resolution on March 25th, which stated that it is the EU’s obligation to assist developing nations in recovering from the financial crisis. The resolution that received 283 in favor votes, 278 against, and 15 abstentions, forwarded several key suggestions for the aid of developing nations. Crucial among the proposals was the suggestion of implementing temporary debt repayment moratoriums and debt cancellation for the world’s least developed nations. The EP Committee on Development report accompanying the resolution stated that debt measures were necessary to allow nations to instate countercyclical fiscal policies to recover from the financial crisis. The EP took up the mantle of the widely discussed idea of a global financial transaction tax, and stated that it would be an appropriate concept to generate revenue for development projects.

Enrique Guerrero Salom, Member of the EP Committee on Development, justified the aid development intentions, saying: “…during the years running up to the current crises the developing countries already suffered from the food and energy crisis as well as from the impact of climate change…the initially economic crisis is becoming a development, social and humanitarian crisis.”

The EP also took the stance that tax evasion and undisclosed capital flows through tax haven jurisdictions are fundamentally detrimental to the economic growth of developing nations, and steps should be taken to lessen the occurrence of tax fraud. Suggestion for accomplishment of the goal included investigating the feasibility of a new internationally binding agreement which will require multinational firms to automatically disclose all profits made throughout its operational jurisdictions. The report suggested that global tax evasion through tax havens currently exceeds 10 times the monetary amount used for development aid of poorer countries. The resolution contained an accompanying section committing the EP to pressure the EU Member States and the European Commission to provide at least 25 percent of profits generated by the current EUETS for developing nations to deal with climate change.

Photo by European Parliament