John Christensen, chairman and founding director of the Tax Justice Network, has resigned from his role, citing “mounting frustration and disenchantment” with the tax advocacy group.
In a resignation letter, released on 2 Aug., he lamented that since 2016 the tax justice campaigners had sidelined an expert group of senior advisers, which in the past enabled the group to focus on “clearly articulated and visionary policy goals”, such as the now-adopted international standard on country-by-country reporting.
“Most of the current TJN staffers 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 largely of senior advisers supported by a tiny team of staffers,” he wrote.
Christensen’s resignation was followed a few days later by prominent tax campaigner Richard Murphy distancing himself of the group.
In a letter announcing his resignation as an adviser, he wrote, “TJN’s vision of social justice has been replaced by a desire to perpetuate employment for its staff by the production of ever more meaningless indices.”
Murphy said instead of innovating policy solutions to influence debate, the organisation now ignores those who disagree with it and who it needs to influence, including the OECD.
Both Christensen and Murphy pointed out that the campaign network completely lacks staff with a tax, accounting or financial services background.
“TJN was set up to campaign for tax justice. That’s a big, complex issue requiring innovation, adept communication and negotiating skills and some real, broadly based, comprehension of the technicalities, none of which TJN now has,” Murphy wrote.
“Instead it has the Financial Secrecy Index, and calls for solutions that can only delay progress towards any tax justice objective, but which will perpetuate index production for the indefinite future.”
Murphy, who developed the secrecy index to promote the term ‘secrecy jurisdiction’, said that had been achieved and it was never the intention to update the index in perpetuity. Instead, the network should move on “to new, bigger and more pressing tax justice issues”.
He said the organisation was “hiding behind” data collection and analysis and had “eliminated all knowledge of tax and political economy”, but he promised to return when CEO Alex Cobham and the current management are no longer with the network.
‘Lack of clear vision for policy goals’
Christensen wrote that the lack of outside advisers and in-house expertise had led to a loss of credibility and clear vision for policy goals.
Rigorous 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 scrutiny was no longer in place, he said, because no one at the organisation meets the ‘fit and proper’ criteria for sign-off.
This had resulted in the group publishing its 2020 State of Tax Justice report full of mistakes and errors.
The annual updates to secrecy and tax haven indices was using up valuable resources “while contributing little to political salience”, he noted. But his suggestion to move to a less frequent update cycle was met with accusations he was “endangering jobs”.
In 2016, the Tax Justice Network received a multi-year, multi-million dollar financial assistance programme from the Ford Foundation. According to the former chairman, this prompted “unjustifiably large pay hikes” for the senior management team, quadrupled TJN’s staff, created top-down managerialism and bureaucracy, and reduced the campaign group’s independence.
Murphy said in a blog post 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 campaigner has recently become increasingly critical of the reports put out by the Tax Justice Network and the organisation’s confrontational approach to the OECD.
2020 State of Tax Justice report
In July, Murphy published his own analysis of the claims made by the TJN’s 2020 State of Tax Justice report, which he said had been widely criticised for its “poor quality”.
He argued the campaign group had inflated its estimates, how much money is lost globally to tax abuse by wealthy individuals and ignored the “many good reasons” why some companies, such as reinsurers, might hold cash balances offshore.
Murphy said the TJN’s report, based on data from the Bank for International Settlements, seemed to erroneously assume that all the balances recorded in tax havens relate to individuals.
The TJN’s calculation of excess bank deposits as an indicator of tax haven activity was also wrong, in assuming that all excess deposits are subject to tax abuse.
In addition, Murphy criticised the report’s inflated 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 the actions of TJN on the OECD minimum tax deal.
The network said the deal reinforced historic power relationships and does not do enough for developing countries. The TJN demanded that the United Nations rather than the OECD should negotiate the deal and countries should hold out for a higher tax rate.
“I think that their negotiating tactics have failed those they traditionally sought to represent. I think that their search for the perfect has undermined a vision of the good. And their abuse of the OECD has basically left them out in the cold, which was far from where TJN was when I was last involved, when I worked to promote the international tax agenda through active engagement,” Murphy wrote.
He noted that criticism of the global minimum corporate tax rate deal as favouring developed nations, having too many carve-outs and the tax apportionment being too small may be valid but it overlooked that it creates an international legal precedent to effectively deliver such a minimum tax rate.
He said the deal is “deeply threatening to tax havens” and “the zero taxes that they offer cease to have appeal for large corporations”. In addition, it would change the nature and culture of tax planning and therefore would have a dramatic behavioural impact.