1. DEBT AUDITING: The alternative to the crisis Taxing multinational corporations: addressing transfer mispricing and cross border tax avoidance Eurodad Tax Conference December 8th, 2010

2. France Ireland Greece Portugal UK Spain PEOPLES OF EUROPE X IMF &BANKS

3. REDUCTION OF WAGES, PENSIONS, SOCIAL EXPENSES, TO PAY THE DEBT WHAT DEBT? WHAT DEBT? DEBT GENERATED BY PRIVATE BANKS RESCUE PRIVATE BANKS RESCUE TAX REDUCTIONS TO BIG COMPANIES AND RICHEST PEOPLE TAX REDUCTIONS TO BIG COMPANIES AND RICHEST PEOPLE THIS DEBT MUST BE AUDIT! IMF

4. TRIBUTARY SYSTEM: Obvious role should be distribute wealthy, by taxing the richest banks, companies and persons. Is that being done?

5. Source: European Comission – Taxation and Customs union - Taxation trends in the European Union - Main results – page 9 - http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-EU-10-001/EN/KS-EU-10-001-EN.PDFhttp://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-EU-10-001/EN/KS-EU-10-001-EN.PDF EUROPEAN UNION: THE LEGAL AVOIDANCE

6. Source: European Comission – Taxation and Customs union - Taxation trends in the European Union - Main results – page 10 - http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-EU-10-001/EN/KS-EU-10-001-EN.PDFhttp://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-EU-10-001/EN/KS-EU-10-001-EN.PDF EUROPEAN UNION: THE LEGAL AVOIDANCE

7. Source: CEPAL. Elaboration: LATINDADD Tributary System in Latin America: Much more unfair than in OCDE

8. Source: OCDE - Perspectivaes Economiques pour l'Amérique Latiine 2009. Elaboration: LATINDADD Latin America: Social unjustice

9. Brazil: Primary Surplus Targets (3.3% of GDP) Brazilian Federal Budget – 2009 USD 220 billions Source: SIAFI. - Not includes the refinacing of the principal, made by the emission of new debt bonds. Elaboration: Auditoria Cidadã da Dívida – www.divida-auditoriacidada.org.brwww.divida-auditoriacidada.org.br

10. Source: Jorge Gaggero, Romina Kupelian y María Agustina Zelada - LA FUGA DE CAPITALES II. - ARGENTINA EN EL ESCENARIO GLOBAL (2002-2009) - Documento de Trabajo Nº 29 - Julio de 2010 – CEFID-AR – Pag 42 - Disponible en: http://www.tjnamericalatina.org/wp-content/uploads/2010/10/LA_FUGA_DE_CAPITALES-II.pdf LATIN AMERICA: THE ILLEGAL AVOIDANCE

11. Source: Jorge Gaggero, Romina Kupelian y María Agustina Zelada - LA FUGA DE CAPITALES II. - ARGENTINA EN EL ESCENARIO GLOBAL (2002-2009) - Documento de Trabajo Nº 29 - Julio de 2010 – CEFID-AR – Pag 43 - Disponible en: http://www.tjnamericalatina.org/wp-content/uploads/2010/10/LA_FUGA_DE_CAPITALES-II.pdf WORLD: THE ILLEGAL AVOIDANCE

12. Source: Tax Justice Network - 2009 http://www.financialsecrecyindex.com/documents/FSI%20-%20Rankings%20-%202009.pdf

13. Source: Jorge Gaggero, Romina Kupelian y María Agustina Zelada - LA FUGA DE CAPITALES II. - ARGENTINA EN EL ESCENARIO GLOBAL (2002-2009) - Documento de Trabajo Nº 29 - Julio de 2010 – CEFID-AR – Pag 62 -63 - Disponible en: http://www.tjnamericalatina.org/wp-content/uploads/2010/10/LA_FUGA_DE_CAPITALES-II.pdf BANKS IN THE TAX HEAVENS... The 4 main banks ok UK (Lloyds, Barclays, HSBC y RBS) have 23,3% of its subsidiaries in Tax Heavens

14. ... THE SAME BANKS THAT WERE RESCUED BY US and EU European Bail-outs (at 13/10/2008): Portugal: € 20 billion; UK: € 37 billion; France: € 360 billion; Germany: € 480 billion; Spain: € 100 billion; Netherlands: € 200 billion And others European Central Bank: announced that will borrow any amount of loans requested by banks Source: Financial Times - http://www.estadao.com.br/noticias/economia,plano-europeu-de-socorro-a-bancos-soma-us-228-tri- diz-ft,259029,0.htmhttp://www.estadao.com.br/noticias/economia,plano-europeu-de-socorro-a-bancos-soma-us-228-tri- diz-ft,259029,0.htm 5/12/2010: IMF said that there is a "strong case for increasing the resources available for this safety net and making their use more flexible, including for the purpose of providing more effective support to banking systems". Source: Reuters - http://www.reuters.com/article/idUSLDE6B406I20101206http://www.reuters.com/article/idUSLDE6B406I20101206

15. ILLEGITIMACIES OF EUROPEAN DEBT Debt produced to save the banks Deficits increased by tax reductions for big companies, richest people, and illegal evasion Debt destabilized by financial derivatives, toxic papers THE ALTERNATIVE:  CUTS OF SOCIAL EXPENSES? NO!  DEBT AUDIT: YES

16. AUDIT DEBT: THE RIGHT TO ACCESS TRUE INFORMATION THE TRUE ROLE OF PUBLIC DEBT: ? Instrument to Finance the Public expenses? or ? Instrument of Financial Power that utilizes the debt as a mechanism of transference of public resources to the financial private sector ? What did the investigations find?

17. Citizens' initiative from the assessment conducted in 2000, with more than 6 million votes Pressure for the realization of the Official Debt Audit, required by the 1988 Federal Constitution, but never implemented CITIZEN DEBT AUDIT THE BRAZILLIAN EXPERIENCE

18. DEBT AUDIT Historical experience – Brasil 1931 Getúlio Vargas  Only 40% of the debt had document - contract ECUADOR CAIC – Commission for Integral Debt Audit Decree nº 472/2007  Reduction of 70% of external debt in bonds BRASIL Senate Commission 1987 Congress Commission 1989 CPI – Parliament Commission 2009/2010  Investigation sent to Prosecutor

19. ECUADOR Audit & BRASIL Investigation Access to documents revealed: Common facts to other countries, which must also be documented by full audits Proves of Remarkable similarities Disrespect to Human Rights due to the constant reduction of resources that should be allocated to the basic needs: Health, Education, Assistance, Work, Food, Home Chance of articulation of the countries submitted to the same process of borrowing

20. ECUADOR: LESSON OF SOVEREIGNITY OFFICIAL AND PUBLIC AUDITING OF THE PUBLIC DEBT Interruption of the payment to creditors (Global 2012 and 2030 Bonds) since November/2008 Sovereignty proposal to repurchase the rest of the debt paying only 30% of the nominal value. 95% of the creditors accepted. The Economist (23/04/2009): “Mr. Correa seems to be incorruptible (...) public spend increase 71% on 2008, due to investments in schools and hospitals” “Ecuador suggests sovereign external debt audits worldwide” (Ecuador Inmediato, 23/04/2009)

21. MAIN ILLEGITIMACIES DISCOVERED by CAIC (Ecuador) and CPI (Brazil): Remarkable excessive liquidity due to large amount of dollars (end of the fixed dollar-gold parity) and petroleum crises on 70’s Secret Loans contracted by dictatorships Floating Interest rates, followed by unilateral high increase of these rates by the private banks in FED and London (violation of Art. 62 of Viena Convention – Rebus Sic Stantibus Rule) Lack of documents, contracts, statistics and transparency in general Illegal clauses: renunciation of sovereignty The main source of public debt has been: HIGH INTEREST RATES PUBLIC DEBT DON’T BENEFIT COUNTRIES BUT IS A MECANISM TO TRANSFER RESOURCES TO THE FINANCIAL SECTOR

22. Relation between the Tributary System and Public Debt The Public Debt payments require constant increase of revenue and deal of new debts to pay interests and amortizations The high Public Debt take the governments to the hands of financial sector, leaded by IMF IMF imposes tax and pension reforms, cuts of social benefits and stop of public investments in order to make stand-by loans and approve renegotiations with private banks It is necessary to deal the debt problem to change the Tributary System

23. LETTERS OF INTENT TO IMF Discovered by CPI in Brazil OBLIGATIONS: Liberalization of the financial flows Implementation of the Washington Consensus: Tax reforms to increase Indirect Taxes, and reduce the progressivity of Direct Taxes Letter of Intent to IMF - 2/12/1991: Exemptions for Financial Capital to promote international flows "Tax reform measures have been proposed to promote the flow of external capital”

24. LATIN-AMERICA: THE TAX HEAVEN OF THE PUBLIC DEBT “CREDITORS” Exemption of income tax to public debt “creditors” Brasil (Art. 1º de la Ley 11.312/2006 ) Argentina (Art. 20-k de la Ley de Impuesto a las Ganancias) Peru (Art. 18-h de la Ley de Impuesto a la Renta) Colombia (Art. 218 del Estatuto Tributario) Mexico (Art. 196 de la Ley del Impuesto a la Renta) THE DEFINITIONS OF “TAX HAVENS” DOES NOT CONSIDER TAX EXEMPTIONS FOR DEBT CREDITORS

25. SOUTH FINANCING THE NORTH Source: Brazillian Central Bank. Countries: Brazil, Argentina, Chile, Uruguay, Paraguay, Venezuela, Bolivia, Mexico

26. SOUTH FINANCING THE NORTH  Brazilian Central Bank buy dollars, increasing the internal debt, that pay the highest interests of the world, and invests it’s large amount of reserves in IMF and US bonds – that yields very low interest – financing the US policies, for example, the bailout of the private banks, and the War.  BRAZIL FINANCES IMF NEOLIBERAL REFORMS IN EUROPE “The weapons and finance are complementary: United States, and eventually Great Britain, could not impose its financial war with the world valetudinarian scrap paper without the coverage of its plethoric nuclear weapons. Who won the military war imposes its dual economic and financial order.” Michael Hudson, Author “Global Fracture: the New International Economic Order”

27. What world do we want? Financial Power? Save Banks or Save People, save Nature? Financial System must serve people, not dominate. Get to the True = DEBT AUDITING

28. PROPOSALS  Fair Tributary Structure  Global Tax on Financial Transactions  End of the Tax Heavens  DEBT AUDITING