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Loopholes cost my country £2.5 billion, says tax campaigner

29 April 2016

Reuters

Ill-gotten: a Christie’s valuer examines jewels confiscated from the Marcos family. The Philippines government estimates that the collection is worth $21 million

Ill-gotten: a Christie’s valuer examines jewels confiscated from the Marcos family. The Philippines government estimates that the collection is ...

WHEN the Prime Minister hosts an anti-corruption summit in London next month, among those watching closely will be Filomeno Santos Ana III, a Filipino economist who has spent the past 20 years campaigning against tax avoidance in his country.

Invited to London by Christian Aid, he described how the proposal to make public the registry of beneficial ownership in the UK’s Overseas Territories and Crown Dependencies would be a “modest step” to helping countries such as the Philippines to crack down on criminal activity, including tax evasion. “Those who transfer their money to these tax havens come from countries with a lot of corruption.”

Mr Ana’s organisation, Action for Economic Reform, was founded in 1996, seven years after the fall of Ferdinand Marcos, the dictator whose kleptocracy robbed the country of billions. Its campaigns has resulted in significant victories, including the passing of the “Sin Tax” on alcohol and cigarettes, revenue from which is used to fund the country’s health service.

He remains critical of the “regressive” tax system in the Philippines, in which the burden is borne mainly by the poor and the middle class. Loopholes, tax breaks, and easily exploited incentives for multinational corporations all contribute to the problem. He estimates that the amount forgone by the public purse as a result of legal loopholes stands at about £2.5 billion, enough to double the country’s current spending on infrastructure.

Another concern is political corruption, particularly those politicians who launder money gained through lucrative sidelines such as bribery and drugs. Again, a lack of transparency hampers justice, he says. The exemption of casinos from the Anti-Money Laundering Act attracted attention last month when it was revealed that $81 million, hacked from a New York Federal Reserve account held in the central bank in Bangladesh, had passed through two casinos and a junket operator in the Philippines, before disappearing.

Public anger about this and the details revealed in the Panama Papers will add to a growing momentum for reform, he thinks.

“It’s like the issue on climate change. It took a long time before even the policy élite would recognise that it was a real burning issue. Now there is consensus about it. It’s just a matter of time before we seal that big victory regarding tax havens.”

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