60% of all trade takes place through tax havens

It\’s an interesting claim, isn\’t it? One that might slightly boggle the eyes in fact.

So what is the origin of this claim? As a new report about international trade, multinationals and taxation says, the origins of the claim are a tad obscure.

TJN (2009) claims that 60% of all global trade is routed through tax havens. The origin of this number is unclear, though.

OK, so what do the TJN say is the origin of that claim? After all, it\’s not possible that they are entirely wrong about everything, stopped clocks and all that.

Here\’s where Ritchie sends us:

Once you take on board the fact that more than 60% of world trade takes place within multinational enterprises, the importance of transfer pricing becomes clear.

Now clearly, trade within a multinational can indeed be routed through a tax haven. In fact, it\’s perfectly possible that all such trade inside multinationals is routed in that manner. But we do in fact require a little proof of this, do we not?

Something more than \”60% of trade is within multinationals therefore 60% of trade is through tax havens\”?

Now you might think I\’m being unfair here but I\’m not, seriously, I\’m not. I am in fact repeating, word for word, what Richard Murphy of the Tax Justice Network uses as his proof for the claim.

When asked \”where does your claim that 60% of world trade is routed through tax havens come from?\” he answers \”60% of world trade is within multinationals\”.

That\’s it.

Seriously, go look for yourselves:

I have been blogging rather a lot about the new Oxford paper on tax avoidance and tax evasion in developing countries today, but issues keep jumping out at me.

Take this one:

\”TJN (2009) claims that 60% of all global trade is routed through tax havens. The origin of this number is unclear, though.\”

If they’d just picked up the phone or sent an email (it’s not hard to do) the answer could have been given. For the record, it’s here, the OECD Observer for January 2002, written by a member of OECD staff:

\”Once you take on board the fact that more than 60% of world trade takes place within multinational enterprises, the importance of transfer pricing becomes clear.\”

So why be so impolite; after all the source quoted is not an academic paper – it is a web page – and a link to an OECD related story implying its source was provided? In addition in other documents where we have used this data we have noted the source – some of which they also include in their bibliography.

One can’t help thinking that a certain lack of effort was expended in trying to find some things out when preparing this piece of work and that demeaning asides were adopted as an alternative.

Why was that, I wonder?

Apologies for repeating Ritchie\’s post in full, but I really do want a permanent record of this. This is a level of argumentation and logic, of proof, that would shame a four year old trying to explain the empty cookie jar and the chocolate smeared around its face.

It\’s entirely possible that the international taxation system is not fit for purpose. I\’m entirely willing to believe that we might be able to build a better one. I\’m even willing to agree that we should go and build a better one.

But given this desperate failure of both logic and evidence, how can we believe anything the TJN tells us on the subject?

Does anyone at all think that the second statement validates the first? On its own? That this is proof of the assertion?

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