John Christensen, president and founding director of the Tax Justice Network, resigned from his post, citing “growing frustration and disenchantment” with the tax rights group.
In a resignation letter, published on August 2, he lamented that since 2016 tax justice activists have dismissed a panel of senior advisers, which in the past has allowed the group to focus. on “clearly articulated and visionary political objectives”, such as the now adopted international standard for country-by-country reporting.
“Most current TJN staff have never met or spoken with senior advisers and seem unaware that, until the current management team took over in 2016, the Tax Justice Network consisted of largely senior advisers supported by a small team of staff, ”he wrote.
Christensen’s resignation was followed days later by prominent tax activist Richard Murphy distancing himself from the group.
In a letter announcing his resignation as an advisor, he wrote: “TJN’s vision of social justice has been replaced by a desire to perpetuate the employment of its staff by producing ever more meaningless clues.
Murphy said that instead of innovating policy solutions to influence the debate, the organization is now ignoring those who disagree with it and who it needs to influence, including the OECD.
Both Christensen and Murphy pointed out that the campaign network is completely lacking in staff with training in taxation, accounting or financial services.
“TJN was created to campaign for tax justice. It’s a large and complex problem that requires innovation, communication and negotiation skills, as well as a real and comprehensive understanding of the technical details, of which TJN currently has none, ”wrote Murphy.
“Instead, he disposes of the financial secrecy index and calls for solutions that can only delay progress towards any goal of tax justice, but which will perpetuate the production of indices into the indefinite future.”
Murphy, who developed the Secrecy Index to promote the term “secrecy jurisdiction,” said this had been achieved and that he had never intended to update the Index in perpetuity. Instead, the network should move on to “new, bigger and more urgent tax justice issues”.
He said the organization “hid behind” the collection and analysis of data and had “eliminated all knowledge of fiscal and political economics,” but he vowed to return when CEO Alex Cobham and current management will no longer be part of the network.
“Lack of clear vision of political objectives”
Christensen wrote that the lack of external advisers and internal expertise had led to a loss of credibility and a clear vision of political goals.
Stringent quality control mechanisms that meant that in the past any form of publication or communication by the Tax Justice Network was subject to prior professional review were no longer in place, he said, as no one within the organization does meet the “suitability and adequacy” criteria for signing.
This led the group to publish its report on the state of tax justice 2020 full of errors and mistakes.
The annual updates of the secrecy and tax haven indices used precious resources “while contributing little to political significance,” he noted. But its suggestion to switch to a less frequent update cycle was met with accusations it “endangered jobs.”
In 2016, the Tax Justice Network received a multi-year, multi-million dollar financial aid program from the Ford Foundation. According to the former president, this resulted in “unwarranted salary increases” for the management team, quadrupled TJN’s staff, created a top-to-bottom manager and bureaucracy, and reduced the independence of the campaign group.
Murphy said in a blog post that his resignation was necessary to protect his reputation. Murphy is a part-time professor of accounting at Sheffield University Management School.
On his website, the tax activist has recently become increasingly critical of reports published by the Tax Justice Network and the organization’s confrontational approach to the OECD.
Report on the state of tax justice 2020
In July, Murphy released his own analysis of allegations made by the TJN State of Tax Justice 2020 Report, which he said had been widely criticized for being “poor quality.”
He argued that the campaign group had inflated its estimates of how much money is lost around the world to tax abuses by high net worth individuals and ignored the “many good reasons” why some companies, such as reinsurers, could hold cash balances abroad.
Murphy said the TJN report, based on data from the Bank for International Settlements, appeared to incorrectly assume that all balances recorded in tax havens are with individuals.
The calculation of the TJN of excess bank deposits as an indicator of tax haven activity was also flawed, assuming that all excess deposits are subject to tax abuse.
In addition, Murphy criticized the report’s exaggerated estimates of tax gaps, tax evasion and offshore investment returns on bank account holdings.
Global minimum corporate tax rate
Murphy, in another blog post, said he was “shocked” by TJN’s actions on the OECD minimum tax deal.
The network said the deal strengthens historic power relations and does not do enough for developing countries. The TJN demanded that the United Nations rather than the OECD negotiate the deal and that countries stick to a higher tax rate.
“I think their negotiating tactics disappointed those they traditionally sought to represent. I think their search for the perfect has undermined a vision of the good. And their abuse of the OECD basically left them out, which was a far cry from where TJN was the last time I was involved, when I was working to promote the international tax agenda through a active engagement, ”Murphy wrote.
He noted that the criticism of the global agreement on the minimum corporate tax rate as favoring developed countries, having too many exemptions and the tax allocation being too low may be valid, but he neglected that it creates a international legal precedent to effectively provide such a minimum tax rate.
He said the deal was “deeply threatening to tax havens” and that “the zero taxes they are proposing cease to interest big business.” In addition, it would change the nature and culture of tax planning and therefore have a dramatic behavioral impact.