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'On the other side': Ecuador's foreign minister blasts Britain on tax justice

United Kingdom

Ecuador's Foreign Affairs Minister Guillaume Long during the interview. © New Internationalist

The country often blocks regulation of tax havens and other predatory fiscal policies argues Ecuador's Foreign Minister Guillaume Long, in an exclusive interview with Alessio Perrone.

Britain is a country that often sits 'on the other side of the fence' in the Global South's struggle for more global tax justice, Ecuador's Foreign Minister Guillaume Long tells New Internationalist.

In an exclusive interview, Mr Long says that a crackdown on tax havens and predatory fiscal policies has been on many developing nations' agendas for years, but that Britain and other Western countries have often boycotted the agenda.

'Historically, Britain has not been on the side of the Global South in its fight against tax havens,' says Mr Long.

'It has not been a country that has pushed a regulatory agenda for tax justice.'

The interview comes shortly after Bermuda Islands' deputy premier also slammed Britain on tax justice, saying Britain is also a tax haven. (The Bermuda Islands are often referred to as a tax haven.)

Ecuador currently holds the presidency of the G77 group of developing nations, and intends to use the position to lead the charge against tax havens and global tax justice by drafting a proposal to create a new United Nations body regulating tax policies worldwide.

The G77 group of countries. Originally formed by 77 countries, it now includes 134. By Kyat02

According to the IMF, tax dodging costs developing countries more than $200bn (£152bn) a year – much more than the total global aid budget.

The proposal for a dedicated UN body is not new – it was put forward by developed nations in 2015 at the Financing for Development conference in Addis Ababa – but opposition from Britain, France and other developed countries made it flounder.

Mr Long says the most pressing concerns are tax havens, but also double standards and other fiscal policies, such as what he calls 'tax dumping', a race to the bottom between countries, lowering taxes in order to attract capital.

'[It's] a kind of race to the bottom that of favours capital and goes against the human rights of human beings, who need the state to accompany them and give them social services,' Mr Long says. 'But because of a lack of tax revenue those states are often in a very precarious situation with regards to the guaranteeing of basic human rights.'

After the Brexit referendum, former chancellor George Osborne announced plans to lower corporate tax to less than 15 per cent to try and encourage transnational companies not to leave the country. Corporate tax in the world's most developed countries is an average of 25 per cent, according to Reuters.

Click on the map to find out about the world's winners and losers of tax dodging.

At the same time, Ecuador is also about to become the world's first country to hold a referendum to bar politicians and civil servants from office if they are found to have assets or companies in tax havens.

Related: Exclusive: Ecuador's foreign minister on the country's plans to ban tax havens

The referendum will take place on Sunday 19 February, together with general elections, in which long-standing President Rafael Correa is not running.

Should the proposal win popular backing, all civil servants and elected politicians would have one year to return those assets to Ecuador or face removal from office.

Ecuador's push on the issue of global tax justice and transparency comes after the Panama Papers scandal, which disclosed tax avoidance practices of politicians, corporations and rich people from different parts of the world, and that Mr Long believes to be one of the reasons why the proposals could be successful.

'Since the scandal of the Panama Papers, tax justice and tax havens are back on the agenda,' he says. 'We sense there is a much more favorable global climate.

'Even within the European Union [...] the growing European consensus is against tax havens. A number of European countries want to work with the G77 to push for more transparency, and push against this race to the bottom.

'However, now that Britain is not going to be within the European Union, we'll have to see what it does.'

Watch our full interview with Guillaume Long on YouTube.

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