Tax justice seminar:

Transnational corporations must pay their fair share

PSI in the Caribbean – Tax justice, the tax haven issue and trade union action

Presented by Sandra Massiah, PSI in the Caribbean

PSI-FES Project WorkshopBuenos Aires, ArgentinaNovember 9 – 10, 2015

About the sub-region

• 23 affiliates in 20 countries and territories• Populations

5,000Montserrat

10,000 – 30,000Caribbean NetherlandsAnguilla

30,000 – 50,000Sint Maarten, Turks & Caicos Islands, British Virgin Islands

50,000 – 100,000St Vincent & the Grenadines, Antigua & Barbuda, Dominica, Cayman Islands, St Kitts-Nevis

100,000 – 200,000Curaçao, Grenada, St Lucia, Aruba, US Virgin Islands

200,000 – 500,000Guadeloupe, Martinique, Bahamas, Barbados,

500,000 – 1 millionSuriname and Guyana

1.3 millionTrinidad & Tobago

2.7 millionJamaica

10.7 millionHaïti

About the sub-region

• Multiple languages (French, Dutch, English, Papiamento, Haitian Creole, Spanish)

• Government – parliamentary democracies and republics, including– Independent countries– British Overseas Territories– Countries in the Kingdom of the Netherlands

• Economies– Small, open – Highly vulnerable to external shocks– ‘Natural’ disasters and other climate change factors are major

threats to growth and sustainability

Tax justice:growth and development in the Caribbean

• Tax justice is one aspect of the on-going conversation on development, high debt, growth and sustainability of Caribbean economies:– Personal income tax– Corporate income tax– Tax reform– Financial services sector– Tax havens

Tax policies across the Caribbean

• Include combinations of:– Personal income tax– Corporate income tax– Consumption tax– Property tax– Small tax payers– Import tariffs

Importance of taxation in the Caribbean

• 3 main sources of revenue– taxation of capital, including physical capital and financial capital – taxation of labour – taxation on consumption

• Caribbean countries were always heavily dependent on taxes from customs duties (especially Antigua & Barbuda, Bahamas, Bermuda)

• With liberalisation of trade, this revenue declined substantially• Taxation on income and profits has now become important in

resource-based economies such as Trinidad & Tobago and Guyana• In service-based countries there is an increase in taxation of goods and

services (introduction of VAT in a number of economies– VAT and sales taxes have been introduced to make up for shortfall in revenue

from customs duties

Income Tax

• Varied income tax regimes throughout the sub-region– Some countries do not levy taxes on

personal income (Anguilla, Bahamas, Cayman Islands, Bermuda, St Kitts-Nevis)

– Others levy taxes depending on residency status

– In some there are flat rates (Belize, Jamaica – 25%)

– In others rates vary according to income levels - progressive

Value Added Tax (VAT) revenue

• Introduced in a number of countries to replace revenue lost from customs and import duties

Rate(%)

% of GDP

Barbados 17.5 10

Trinidad % Tobago 15 6Jamaica 16.5 8

Haïti 10 4

Total tax revenue as % of GDP

Suriname 32

Trinidad & Tobago 29

Barbados 27

Curaçao 26

Dominica 24

Jamaica, Belize 23

St Vincent & the Grenadines, Guyana, Anguilla 22

St Lucia, St Kitts-Nevis 21

Grenada, Antigua & Barbuda, Sint Maarten 18

Bahamas 16

Haiti 13

Tax havens

• Characteristics of tax havens– Nil or only nominal taxes on individuals or

businesses.– Protection of personal financial information. – Lack of transparency.

• Many lists of tax havens• Most comprehensive seems to be the one

from the Tax Justice Network

RANK Jurisdiction FSI-Value4 Secrecy Score5 Global Scale Weight6

4 Cayman Islands1,2 1,233.6 70 4.694

14 Bermuda1 432.4 80 0.061

20 British Virgin Islands1,2 385.4 66 0.24126 Barbados 317.5 81 0.021

35 Bahamas1 226.9 80 0.00952 Belize 129.8 80 0.002

55 Aruba2 113.3 71 0.003

58 Curacao2 106.4 77 0.00159 US Virgin Islands 102.9 69 0.003

61 Anguilla1 96.8 76 0.001

62 St Vincent & the Grenadines1 85.1 78 0.001

63 Turks & Caicos Islands1 81.8 78 0.000

65 St Lucia1 66.9 84 0.000

67 Antigua & Barbuda1 60.5 80 0.000

70 Grenada1 55.8 78 0.000

77 Dominica1 26.9 79 0.000

80 St Kitts & Nevis1 18.5 80 0.000

82 Montserrat1 74

FSI 2013 - FINAL RESULTS

“Tax havens” in the Caribbean

Caribbean Financial Action Task Force (CFATF)

• Comprises 27 jurisdictions* of the Caribbean Basin which have agreed to implement the international standards for – Anti-money Laundering– Combating the Financing of Terrorism

(AML/CFT) – Financial Action Task Force Recommendations

(FATF Recommendations)– Secretariat is in Port of Spain, T&T

*Anguilla, Antigua & Barbuda, Aruba, Bahamas, Barbados, Belize, Bermuda, Cayman Islands, Curaçao, Dominica, Dominican Republic, El Salvador, Guyana, Grenada, Guatemala, Haiti, Jamaica, Montserrat, Sint Maarten, St Lucia, St Kitts-Nevis, St Vincent & the Grenadines, Suriname, Trinidad & Tobago, Venezuela, Virgin Islands

Views on tax haven status

• “They’re always moving the goal post”• “These are attacks on our country, trying to ruin

our reputations globally”• “Well we certainly don’t see any of the money

that they’re talking about”• “Why don’t they talk about the big countries that

are tax havens? Why always focus on the Caribbean?”

Action by affiliates

• Participation in national consultations in many Caribbean countries on fiscal reform including reform of taxation

• Some PSI affiliates in CARICOM countries have been invited to be part of the CARICOM Task Force on government procurement (NUPW Barbados)

• Participated in Funding Democracy summit held in Ottawa, Canada in June 2015

• Make connections with CFATF

Linking with other GUFs

• There are some large companies and groups of companies owned by Caribbean nationals that have transnational reach (financial services, oil and by-products,

• Initial contact with UNI representative in the Caribbean to investigate/learn more about these companies and their record in paying taxes– Not very responsive

Priorities, future plans

• Nominated a representative from affiliate in Belize to serve on a Funding Democracy steering group

• Further discussions and develop more epecific action plans at 2016 SUBRAC

• Engage with CARICOM Secretariat on the issue of taxation, tax havens and related issues at 2016 SUBRAC

• Political issues/themes – yes; but technical knowledge is also important

• Some technical assistance is available within the sub-region

• Need to do some studies – similar to those done by PSIRU

• Need to develop the skills that will allow affiliates to better engage in discussions and consultations

• Focus on women and young workers to develop their skills and capacity

Actions for 2015/2016• Sub-regional working group on Tax Justice and

related issues (whistle blowing, anti-corruption)– Focus countries– Develop skills and competencies of working group

members• Continue to build awareness• Educate• Establish and build alliances– Other unions and national centres– Civil society partners (especially universities)

Proposed Actions for 2015/2016• Need to have studies on selected countries,

with concrete info• Representation in Funding Democracy

Steering group – initiated by PSI affiliate in Canada

• Special discussion at 2016 SUBRAC• Engage with CARICOM Secretariat on the issue

of taxation, tax havens and related issues at 2016 SUBRAC