Luxembourg news: Financial Transaction Tax bad, tax avoidance good

An article on Luxembourg’s says that Finance Minister Pierre Gramegna has confirmed that the governing coalition “remains opposed to a Financial Transaction Tax in Europe, as long as such a tax does not become a global standard.”

“The government agrees with the Association of the Luxembourg Fund Industry, ALFI, which sees the European and Luxembourg financial centres disadvantaged as long as the FTT is not introduced in a coordinated effort worldwide.”

Meanwhile, also reports that the Center for Research in Economics and Management of the University of Luxembourg “celebrated its 20th anniversary with an afternoon of lectures that got straight to the point.”

“Tax Competition and Public Policy: Luxembourg’s Place in International Tax Competition” was the title of the event that took a frank look at such questions as how to avoid paying taxes, tax competition, the fight against tax havens and the political impact of fiscal policy.”

The first presentation mentioned in the article was called “Hybrid Mismatch Arrangements – How to Avoid Paying Taxes.”:

“Although the title of Prof Rust’s presentation certainly raised eyebrows, its content focused on the ways by which companies can legally reduce their tax liability – IP and hybrid financial instruments, for example – as well as a warning about the myriad of countermeasures aimed at preventing them doing just that.”

The article continues:

“The well attended event also looked at the question of what constitutes a tax haven. According to Prof Kai Konrad of the Max Planck Institute, there is no clear definition. However, he did note that there do seem to be commonalities between those jurisdictions popularly considered tax havens – excellent governance, high GDP per capita, small population and they tend to be islands, isolated yet close to customers.

The Professor declined to comment on whether or no the Grand Duchy falls into this category.”

The University of Luxembourg’s Center for Research in Economics and Management seems to have form in providing academic camouflage for tax haven activity based purely on theoretical models.  For example, a recent discussion paper on “Offshore financial centers and bank secrecy” finds that “the presence of an offshore financial center fosters competition in institutional infrastructure, which is beneficial with or without bank secrecy”.


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