The call came from Global Financial Integrity (GFI) as the European Debt Crisis progresses through its third year with no clear end in sight.
GFI highlighted the fact that an opaque financial system comprised of tax haven secrecy, shell corporations, and trade mispricing cost Greece – ground zero of the continent’s economic woes – an estimated $160 billion between 2000 and 2009.
“The focus of today’s summit is the stability of the global financial system,” said Raymond Baker, director of GFI.
“World leaders cannot possibly stabilize the global economy without first tackling the system of tax haven secrecy, anonymous corporations, and trade mispricing that got us into this mess.”
Meanwhile, a January report from GFI also revealed that Mexico – the host of the this week’s summit – suffered $872 billion in illicit outflows from 1970 to 2010, with annual outflows skyrocketing from an average of $3.0 billion per year in the 1970s to a remarkable $49.6 billion per year in the decade ending 2009.
Much of this money ended up in the United States.
GFI research indicates that crime, corruption, and tax evasion in the form of illicit financial flows cost the entire developing world an estimated $1 trillion per year.
On Friday, GFI, 65 other civil society organizations, and 28,000 individuals from around the world sent a letter to Mexican President Felipe Calderon, the current chair of the G20, urging him to make tax haven secrecy a priority of the summit.
The letter calls on the G20 to promote three policy measures:
- Public, national registries of the true beneficial owners of companies and foundations;
- The multilateral and automatic exchange of tax information between tax jurisdictions, including tax havens; and
- A new global accounting standard on country-by-country reporting which would require companies to report on their profits made and taxes paid in every country in which they operate, including tax havens.
