Richard Murphy, who is stealing our future

Who is stealing our future?

Richard Murphy Professor of Practice in International Political Economy, City, University of London Brussels 19 September 2018

The tax gap • The tax not collected by choice • Uncollected taxes • Like wealth taxes • Land value taxes, etc.

• The taxes not elected because of abuse • Evasion • Avoidance

• The taxes not collected because of admin failings • Bad debt • Simple failure to ask because of a shortage of resources

Is it all multinational corporations and the wealthy?

• MNCs may be US$500 billion worldwide of which very little might be in the EU (Cobham and Jansky 2017) • The wealthy might evade 25% of their taxes and the rest 5% (Zucman et al, 2018) • These are not enough to explain the tax gap

So what is the size of the EU shadow economy?

• • • • •

Estimates of the EU shadow economy in 2015: €2.23 trn (Medina and Schneider 2017) €2.49 trn (Rackowski 2015) €2.21 trn (Based on the EU VAT gap data from EC) €2.33 trn Average

The size of the tax gap • Grossing up GDP for the missing economy and averaging the missing economy estimates the EU tax evasion gap may be €890bn a year • That excludes losses to avoidance • And all losses to taxes not on bases in GDP, e.g, wealth, capital gains, inheritance and land value • So the real total is now well over €1 trn • And most will be domestic tax evasion

What can we do about?

• Make better estimates of the tax lost, and why • Prepare proper domestic and international spillover analyses for each country to identify where tax risks really are • Tackle chromic under-resourcing of tax authorities and company registries • Build the obviously true narrative that beating the tax gap is a pre-condition to a fair common market and is not antibusiness at all • Persuade our politicians to act • It is a political failure that we still have such a large tax gap