Tax Haven or Conduit? A Discourse Analysis of Dutch Media and Politics Martijn van der Hoek Master thesis Political Science – Political Theory specialization June 2020 Supervisor: dr. Gordon Arlen Second reader: dr. Vivienne Matthies-Boon Table of Contents Table of Contents ..................................................................................................................... 1 Introduction .............................................................................................................................. 2 Theoretical Framework ........................................................................................................... 3 Literature on Tax Havens ................................................................................................... 4 Discourse on Tax Havens ................................................................................................. 11 Methodology ........................................................................................................................... 15 Media Discourse ............................................................................................................... 16 Political Discourse ............................................................................................................ 18 Performing the Analysis ................................................................................................... 18 Limitations ........................................................................................................................ 19 Ethical Considerations ...................................................................................................... 19 Results of the Discourse Analysis .......................................................................................... 20 Media Discourse ........................................................................................................... 20 Political Discourse ........................................................................................................ 35 Discussion ................................................................................................................................ 40 References ............................................................................................................................... 44 1 Introduction Following a 2013 debate in the Dutch parliament on tax treaties, parliamentarians voted by a margin of 124 to 26 that, henceforth, the Netherlands ought no longer to be referred to as a tax haven (Tweede Kamer, 2020a). The negative connotations around the term have meant that, historically, even states who are widely considered to be tax havens have shunned the term. Nonetheless, that such a decision is made by parliamentary vote raises more questions than it answers, for example, over what makes a country a tax haven. But more so, what is so pressing about the Dutch situation that this vote was held and overwhelmingly supported? These questions are interesting for a range of both academic and socio-political reasons. In academic research tax havens have become a frequent object of study in the past few years, particularly within economics and related fields (e.g., Zucman, 2015; Palan, Murphy and Chavagneux, 2010). Research in these fields has focused primarily on getting a better understanding of tax havens, both by investigating their history and generating new data about their current importance. In political theory the topic has gathered some attention as well, where central questions concern the normative implications of tax competition (e.g., Dietsch, 2015; Risse and Meyer, 2019). However, there is very little research with an explicit focus on what debates over tax sheltering look like in practice, and which dynamics exist in the domestic politics of tax havens. Questions over which stakeholders are involved in such debates and how they attempt to make themselves heard largely fall outside the scope of existing research. Similarly, it is an open question whether the conclusions drawn in this academic research are reflected in popular discourse, and why or why not that is the case. In short, there appears to exist a significant gap in the academic study of tax havens that this thesis attempts to address. More details about this gap and how this thesis relates to existing research is discussed in the theoretical framework. From a social and political perspective this thesis can also be of value in a number of ways. Firstly, by looking at Dutch discourse on the country’s tax structures and financial services industry and connecting those to the academic research on these topics, certain disparities between the two can be found. If those disparities are significant, that may mean there are problems of democratic accountability in Dutch politics. To elaborate, in order for citizens to make informed decisions in a democratic context, it is necessary for them to have access to information about public affairs and their consequences. If it thus turns out that the state of the Dutch tax system is not accurately reflected in public discourse, then the ability to make informed decisions is harmed. The same goes for normative problems that may arise from the 2 existence of tax havens. These have both domestic and international consequences. Within tax havens, one effect of tax avoidance is the creation of a rent-seeking industry consisting of tax lawyers and consultants which advise on and construct the legal-financial structures that are used to avoid taxes (e.g, Saez and Zucman, 2019, pp.73-76). Internationally, the money that flows into tax havens goes untaxed (or undertaxed) in the country of origin; this leads to problems of injustice, and can also contribute to uneven development between states. On this dimension as well a possible lack of public knowledge obscures these issues from being discussed and politically addressed. To determine whether any of this is the case in the Netherlands, it is necessary to chart first of all what popular discourse on this topic looks like in the country. To do so, this thesis asks the following research question: ‘What are the defining characteristics of the Dutch discourse about the status of the Netherlands as a tax haven, as it exists in media and party politics?’ To answer this question in full the thesis is broken up into four main sections. First, an extensive theoretical framework that draws on existing literature, then a discussion of the research design and its justification, followed by two sections with the results of the discourse analysis: one on the media, and one on party politics. The discussion at the end of the thesis goes over the implications of the findings and suggests the types of future research that could be valuable. Theoretical Framework Given the fact that this thesis touches upon a number of fields of study, and that its topic is relatively unexplored, the theoretical framework does not consist of a single model, but rather collects and discusses the implications of a broad range of literature that is relevant. Where possible hypotheses that can be drawn from this research are put forward. The discussed literature, broadly speaking, falls into two categories. The first half of this literature review looks at the existing research on tax havens. At the heart of this thesis, for example, is the simple question of what a tax haven is; the academic research on this is discussed first. Other central questions in this first section are about the different ways tax havens can be conceptualized, what the scale of the problem of tax havens is, what their consequences are, and where the Netherlands fits into this academic discussion. The second section of the literature review forms the bridge between the tax haven literature and the discourse analysis 3 in this thesis. There, I discuss (the lack of) research on the discourse about tax havens, and some normative and political implications findings about this discourse might have. Literature on Tax Havens One of the central features of the academic literature on tax havens (alternatively called offshore financial centers, or OFCs) is that there is no universally agreed upon definition of what a tax haven is (Palan, Murphy and Chavagneux, 2010, p.17). There are a few reasons for this, but two stand out. Firstly, tax havens come in different shapes and sizes (e.g., Garcia- Bernardo, et al., 2017 classifies ‘sinks’ and ‘conduits’ as two different types). Secondly, there exists a boundary drawing problem. While there is agreement on the types of policies and structures generally characteristic of tax havens, no objective measures for how egregious such characteristics must be to meet the ‘haven’-threshold exist (Palan, Murphy and Chavagneux, 2010, pp.21-22). Moreover, even if one would draw such a boundary it would need redrawing over time as jurisdictions change their policies and become less or more haven-like, and existing havens adapt their strategies. Such changes can take place over relatively limited timespans; Sikka (2003, p. 366) argues that in roughly 20 years “the number of OFCs has doubled from about 30 to more than 60”, although again, this depends on one’s definition. In short, there is a definitional ambiguity at the core of existing research. A second question concerns the existence of the aforementioned term ‘offshore financial center’. Palan, Murphy and Chavagneux (2010, p.24) argue that although OFCs and havens have different historical origins “today