draining development.pdf - Khazar University

340 Draining Development?ever, close by setting out a clear agenda for future research that wouldaddress the need for more information on these links. Without suchresearch by academics and policy researchers not only at nongovernmentalorganizations, but also at international financial institutions,there can be no guarantee that the well-meaning efforts of the G-20 orother international policy coordination groups will generate the potentiallysubstantial benefits for development. The requirement for moreresearch must be addressed without delay.Tax Havens: Offshore Financial Centersor Secrecy Jurisdictions?To undertake serious analysis of the impact of tax havens, the analystmust assert a specific definition that is objectively quantifiable anddirectly related to the harm believed to occur. This is necessary if theimpact of those jurisdictions designated as tax havens is to be evaluatedstatistically. On this issue, there is a broad literature focusing on academicinterests, advocacy, and official policy positions and encompassinga range of views.DefinitionsThe most common term—tax haven—is probably also the most problematic.As long ago as 1981, the Gordon Report to the U.S. Treasuryfound that there was no single, clear objective test that permits the identificationof a country as a tax haven (Gordon 1981). While originallyintended, presumably, to indicate a jurisdiction with lower tax rates thanelsewhere, the term came to be used to cover jurisdictions with a greatrange of functions, many largely unrelated to taxation.Eden and Kudrle (2005), for example, draw on the literature to identifytwo categories of havens: one based on type of taxation, and one based onactivity. The first category, following Palan (2002), separates havens into“countries with no income tax where firms pay only license fees (e.g.,Anguilla, Bermuda), countries with low taxation (e.g., Switzerland, theChannel Islands), countries that practice so-called ‘ring-fencing’ by taxingdomestic but not foreign income (e.g., Liberia, Hong Kong), andcountries that grant special tax privileges to certain types of firms oroperations (e.g., Luxembourg, Monaco)” (Eden and Kudrle 2005, 101).