Washington | In his first reaction to the leaked ‘Panama Papers’ that revealed names of thousands of world leaders and celebrities who have stashed money in tax havens, President Barack Obama today said that global tax avoidance may be running into trillions of dollars worldwide.
There is no doubt that the problem of global tax avoidance, generally, is a huge problem, Obama said adding the issue has been brought up in G7 and G20 meetings. There has been some progress made in coordinating between tax authorities of different countries so that we can make sure that we’re catching some of the most egregious examples, he said.
But as I said before, one of the big problems that we have is that a lot of this stuff is not illegal. Unless the United States and other countries lead by example in closing some of these loopholes and provisions, then in many cases you can trace what’s taking place, but you can’t stop it. There is always going to be some illicit movement of funds around the world. But we shouldn’t make it easy.
We shouldn’t make it legal to engage in transactions just to avoid taxes, he asserted. That’s why I think it is important that the Treasury acted on something that’s different from what happened in Panama. The corporate inversions issue is a financial transaction that is brokered among major Fortune 500 companies to avoid paying taxes, he said.
But the basic principle is making sure that everybody is paying their fair share, and that they don’t just have a few people who are able to take advantage of tax provisions, that’s something that they really have to pay attention to. This is all net outflows of money that could be spent on the pressing needs here in the United States.
The volume that you start seeing when you combine legal tax avoidance with illicit tax avoidance, or some of the activities that we’re seeing, this is not just billions of dollars. It’s not even just hundreds of billions of dollars. Estimates are this may be trillions of dollars worldwide, and it could make a big difference in terms of what we can do here, Obama said.