Human rights of taxpayers should have international protection. Taxpayers have missed out in the growing international protection of human rights. Although over 250 tax cases have gone to the European Court of Human Rights ‘in the field of taxpayer protection the process of international standard-setting has hardly begun’ says the investigation by the European Financial Forum think tank. ‘New proposals to extend massively the exchange of information between tax authorities around the world require a more systematic protection of taxpayers’ rights. Protection is not uniform from country to country and is in some respects quite haphazard’. The Forum recommends that protection should be given against retrospective tax laws, dis proportionality, unfair procedures and breach of confidentiality. Taxpayers should be given an explicit right to arrange their affairs in such a way as to lawfully minimize the burden of tax. An internationally recognized minimum standard should be established under United Nations auspices.
‘With increasing exchange of information between taxmen around the world, guarantees of confidentiality ‘are illusory for most taxpayers,’ says the report.
‘In the vast majority of countries the taxpayer is not given prior notice of the proposed exchange of information relating to him, so there is no opportunity to challenge the exchange’. Three countries: the Netherlands, Germany and Switzerland – comply with best practice by providing notification of a proposed exchange of information and an opportunity to challenge that exchange. But in the UK the Keith Committee recommendation ‘that a procedure should be introduced whereby a taxpayer should be informed to supply information of a commercially secret nature to a foreign revenue authority and should have an opportunity to challenge that exchange of information before an independent tribunal’ was rejected by the Inland Revenue.
The report says that there should be no information exchange with countries not protecting taxpayer rights. ‘If the international community comes to recognize basic minimum standards for the protection of taxpayers, then countries which do not respect those standards – and do not sign up to the international norms – should not be entitled to receive information from those countries which do’. The report says that whilst there is ‘a high degree of consensus’ that taxpayer rights should be protected ‘no attempt has yet been made to incorporate these principles into an international legal instrument. As a result the protection of taxpayers’ rights does not apply to all countries, and is far from uniform between countries’.
The report says that tax legislation which imposes ‘an excessive or disproportionate burden on particular taxpayers may already be challenge able’ under the European Convention on Human Rights.