Ecuador’s Tax Haven Vote: “Yes” Wins!

Ecuador’s Tax Haven Vote: “Yes” Wins!

In a first-of-its-kind referendum, Ecuadorian voters approved of a rule that would forbid elected officials and public servants from stashing away wealth in tax havens.

With close to 95 percent of the ballots accounted for, “Yes” votes amounted to nearly 55 percent (4,733,337) of the total with “No” votes rounding up a bit fewer than 4 million votes.

More specifically, the question voted on asked: “Do you agree that, for those holding a popularly elected office or for public servants, there should be a prohibition on holding assets or capital, of any nature, in tax havens?”

Referendum on Public Officials and Tax Havens in Equador

Ecuador’s Foreign Minister, Guillaume Long, who’s a staunch proponent of greater tax justice, affirmed that the vote “shows that the people continue to rely on government management for fighting corruption of both national and international bureaucracies.”

On Twitter, Long summarized the victory saying, “Ecuador has set an example for the world, one that will remain in history.”

In the past, Guillaume has been adamant on setting up an international organization to regulate taxation and curtail tax evasion throughout the globe.

“Following the Panama Papers and other tax haven scandals, people are fed up with the serious damage that tax havens cause to our economies… That is why we will also be stepping up our global leadership in the campaign for a new United Nations body to put an end to this shameful hidden network of tax theft,” Long added following this victory.

As reported by TeleSUR, now “all public servants and elected officials will have one year to bring offshore capital back to the country or they will be removed from office for violating the policy aimed at combating tax havens and increasing accountability of public officials.”

Opposition Party Denies Tax Avoidance

Guillermo Lasso, the opposition’s main Presidential candidate, has been accused by the Correa administration of hiding his wealth in tax havens, particularly Panama.

As reported by TeleSUR, an in-depth investigative piece by El Telégrafo claimed that “forty Ecuadorean economic entities and individuals, including right-wing opposition leader and wealthy banker Guillermo Lasso, have used Panamanian law firms, most notably the star of the Panama Papers, Mossack Fonseca, resulting in a total of more than US$2 billion in Ecuadorean wealth being based offshore in Panama.”

Alongside his sons, Lasso is listed as Director for “the Panama-based Banisi S.A., formerly known as Banco Guayaquil Panama S.A. and a subsidiary of Banisi Holdings S.A.”

Lasso, who’ll face Lenin Moreno on April 2nd in a second round for a shot at becoming Ecuador’s next President, denied these allegations, stating, “A bank has buildings, staff members, clients, it’s controlled by a banking regulatory body, it pays a larger amount of taxes than in Ecuador, in other words it’s not in a tax haven and also serves as a way to capture resources abroad to help finance companies in Ecuador, so it’s very different to having a checking account where you can write a check and say that instead of having it in Panama you have it in X coop in Ecuador, so this is very different and obviously I will respect the will of the people.”

Lasso also criticized the referendum, calling the question “deceiving, undignified and unimportant.”

Global Notice for Ecuador's Tax Haven Referendum

Global Notice for Ecuador’s Tax Haven Referendum

The world has taken notice of this bold initiative set forth by the Rafael Correa administration.

In an open letter back in January of this year, British MP Chris Williamson said, “I think the referendum question in Ecuador is really interesting.”

“The plebiscite is the initiative of the outgoing progressive President Rafael Correa, who calls it an “ethical pact”.  It is an attempt to renew the social contract between the population, their elected representatives and public servants in a common effort to stop wealthy elites routinely abusing the system,” he added.

Finally, Williamson praised the initiative: “Ecuador has already done a great service for the world, and their innovative action could prove to be the catalyst to deliver a fundamental shift in that facilitates worldwide tax justice.  We owe them a huge debt of gratitude.”

Tax justice NGOs also commented on this landmark referendum.

Oxfam’s Rosa Maria Cañete lauded the decision, saying, “The popular consultation in Ecuador is an advance for Latin America and the world, the first process worldwide allowed the public to raise their voice demanding that those who must serve the people can not evade fiscal responsibilities or hide economic activities from the necessary controls.”

Additionally, Porter McConnell, Director of the Financial Transparency Coalition, said, “If Ecuador can harness this increased appetite for transparency by emerging as a global leader, perhaps other countries will be persuaded, too… As head of the G77, it’s vital that their leadership doesn’t stop when the last referendum vote is counted, but instead Ecuador uses its national progress to help lead global efforts for fairer rules to tackle illicit financial flows.”

This referendum took place alongside elections for President and the National Assembly. While the ruling party Alianza Pais maintained its majority in the National Assembly, a second round will be necessary to elect Ecuador’s next President.

Do you think other countries will follow in Ecuador’s footsteps?

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