 "Barack Obama")
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.
Obama urged the Republican-controlled Congress to close legal loopholes so as to prevent American companies from evading taxes and shipping jobs overseas.
"We should keep building an economy where everybody has a fair shot, and everybody plays by the same rules," Obama said a day after the US Treasury Department issued new set of rules making it more difficult for US companies to save taxes by shipping jobs abroad.
Americans, he stressed, should be able to know that big corporations aren't playing by a different set of rules.
Obama praised the Treasury Department for its new set of rules that would reduce the tax benefits for "serial inverters"as he lashed out at such US companies.
"They effectively renounce their citizenship. They declare that they're based somewhere else," Obama said.
"It sticks the rest of us with the tab, and it makes hardworking Americans feel like the deck is stacked against them," he added.
"In the news over the last couple of days, we've had another reminder in this big dump of data coming out of Panama that tax avoidance is a big, global problem. Its not unique to other countries because, frankly, there are folks here in America who are taking advantage of the same stuff. A lot of it is legal, but that's exactly the problem," Obama said.
"Its not that they're breaking the laws, it's that the laws are so poorly designed that they allow people, if they've got enough lawyers and enough accountants, to wiggle out of responsibilities that ordinary citizens are having to abide by," he said.
In the US there are loopholes that only wealthy individuals and powerful corporations have access to. They have access to offshore accounts, and they are gaming the system, he noted, adding that middle-class families are not in the same position to do this.
"In fact, a lot of these loopholes come at the expense of middle-class families, because that lost revenue has to be made up somewhere. Alternatively, it means that we're not investing as much as we should in schools, in making college more affordable, in putting people back to work rebuilding our roads, our bridges, our infrastructure, creating more opportunities for our children," he said.
