Case: Policy coherence in general

19-02-2010 MEP Guerrero Salom asks about Illicit Financial Flows

MEP Enrique Guerrero Salom expresses his concerns for the illicit financial flows that come from developing countries. He quotes the World Bank, stating that about 500 to 800 billion dollars in illicit finances flow comes from developing countries, which drain hard currency reserves, increases inflation and reduces tax revenues that undercut the opportunities that developing countries have to develop.

Tax revenues has proven to be the most predictable, sustainable and safe source of financing for development. Increase in inflation and reduction in tax revenues leaves less for investments in public services, social security and human welfare as well as investment that is necessary for the fulfillment of the states obligations to protect human rights. Reasons for these illicit financial flows and tax evasions are poor transparency, tax havens and multinational corporations that misuse the system to avoid taxes. This all feeds the race to the bottom in tax policy.

Guerrero Salom raises the question on what the EU is going to do concerning the fight against tax evasion and capital flights in and from developing countries and how the EU hopes to strengthen developing countries fiscal management capacity.

Fair Politics EU is currently developing a new case study on tax evasions and illicit financial flows because it is a concrete example of the incoherence and unfair policies of the EU.

For raising his concerns to the commission, we recognize MEP Guerrero Salom as Fair Politician.

Monitor fair: S&D

 

Parliamentary questions
19 February 2010
H-0086/10
WRITTEN QUESTION by Enrique Guerrero Salom (Verts/ALE) to the Council

Subject: Illicit financial flows, tax evasion and developing countries

Today we have sufficient evidence about the harmful consequences of illicit financial flows for developing countries. Even if cross-border illicit financial flows are largely hidden and difficult to measure, estimates are reasonably clustered in a range of $1 trillion to $3 trillion annually. The World Bank quotes figures of $1 trillion to $1.6 trillion annually, of which half$500 to $800 billion a yearis estimated to come from developing countries. The estimated $500 to $800 billion a year of illicit money passing out of developing countries is the most damaging economic factor affecting the poor. It drains hard currency reserves, increases inflation, reduces tax revenues and has many other consequences that undercut developing countries' opportunities.

What efforts and initiatives is the EU undertaking, or does it intend to take in the coming months, to fight against tax evasion and capital flight in and from developing countries? How can we strengthen developing countries' fiscal management capacity?