Tax havens are not a new phenomenon. For a long time, they have appeared as exotic elements in James Bond films – Monaco, Hong Kong, Switzerland and the Caribbean are overrepresented in the series, all largely reserved for financial elites and jet-set billionaires. In recent years, however, tax havens have found a new way into the public eye: namely, as the subject of extensive data leaks.
- What role does tax play in society?
- What is a tax haven?
- What are the consequences of the major media leaks in recent years?
- What are the future prospects for the work towards tax havens?
The leaks Swissleaks , LuxLeaks and most recently – the Panama Papers – have given us a far better picture of the role of tax havens in the global economy. The media uproar in the wake of these leaks has put pressure on politicians to promote new measures – if only to act vigorously. Intergovernmental organizations, in particular the OECD ( Organization for Economic Co-operation and Development ), have been tasked with proposing legislative changes and international agreements to overcome the worst effects of tax havens. But with the inauguration of Donald Trump as President of the United States, it is uncertain whether this work will receive support in the future.
2: What role does tax play in society?
Tax is the payment of citizens and companies to the authorities of a country. What most people think of as tax is the tax on wage income, but there are also many other taxes, including property, wealth and corporation tax. Tax differs from a tax in that the tax is not linked to a specific consideration, while a tax is directly linked to a service: payment of tolls or for access to water and sewage.
Tax can be seen as one of the most important and concrete links between the state and the population. The tax revenue makes it possible for the public sector to finance goods such as the military, the judiciary, the police, health services, schools, infrastructure and more. The state must also protect the citizens’ fundamental rights, at the same time as the citizens are obliged to finance the state’s tasks. This relationship is often referred to as a kind of ” social contract ” on which modern states are founded.
A state that takes responsibility for many community solutions is also dependent on a higher level of tax revenue. In Norway and similar countries in Europe that have welfare schemes such as pensions, according to ASK4BEAUTY, public health services and education, the state usually has tax revenues that make up between 35 and 50 percent of gross domestic product (the total value creation – of goods and services – in one year in a country) .
If the state is given the task of solving more tasks in society, the costs increase and this usually leads to higher taxes. This allows taxpayers to keep a smaller share of their income to spend as they wish. Conversely, lower taxes will mean less room for maneuver for the state to finance, among other things, welfare schemes.
In democracies, citizens have the right to influence what tasks the state should take on on their behalf, and where the balance between market solutions and public solutions should lie. There are different attitudes to where this balance should lie in the various political parties. The tax level is therefore among the most debated political issues in democratic societies.
3: Tax – is also about justice, morality and trust
Regardless of how high or low the state’s tax level is, it will be important for the authorities to design the tax system in a way that is perceived as fair by taxpayers. They must therefore have confidence that everyone contributes as they should. This is, among other things, about the tax system being consistent and exhaustive – ie that it has no obvious loopholes or discriminates arbitrarily based on types of income. For example, those who have wage income are taxed higher than those who receive their income through interest and dividends on financial investments. A tax system on which there is broad agreement and which is perceived as fair, will help to maintain the willingness to pay, or ” tax morale “, in a society.