Tax Havens... A Financial Curse
Nicholas Shaxson delved into Tax havens in his widely read book Treasure Islands.He calls them "sideshows to the global economy".His next book is aptly titled..THE FINANCIAL CURSE.
5 questions on tax havens ,are abegging answers...WHAT,WHERE,HOW MANY, IMPACT,SOLUTIONS.
No precise definition exists of what is a tax haven.Nicholas defines them
as "escape routes from financial regulations,disclosure norms, &criminal liability".Colloquially they are hiding places for illicit wealth of the high & mighty.Ask a tax haven & it justifies its existence as a tax neutral opportunity which enables world's financial flows to move smoothly.
Where are they located??How many have been created?.
Tax Justice Network 's Corporate Rax Haven Index lists the top 3 as
BRITISH VIRGIN ISLANDS
BERMUDA
CAYMAN ISLANDS which , incidentally are all British overseas territories.
However the Financial Secrecy Index puts Switzerland at the top
followed by the USA & CAYMAN ISLANDS.But the list keeps changing as the clever finacial wheeler dealers ,find new havens to dodge the tax authorities.
Researches estimate that tax havens cause tax losses to governments to the tune of $500-600billion.In 2017 ,economist Gabriel Zucnan at Berkeley,calculated that individual wealth hidden in tax havens was a staggering $8.7 trillion , enough to feed all hungry mouths on planet earth for lifetime.But another more optimistic estimate is 4 times bigger ,by a lawyer James Henry, targeting a figure of $36 trillion.This amounts to individual tax evasion running into billions of dollars , over & above the corporate evasion of $500 billion plus.
In terms of world equity ,the impact of these tax havens is stupendous ,to say the least.Panama Papers & Luxembourg leaks have put pressure on the international community to act.OECD created a COMMON REPORTING STANDARD(CRS) for exchange of financial data automatically across borders ,for the benefit of tax authorities ,to monitor their tax payers holdings overseas.As of July 2019, records indicate that 90 countries volunteered to do so.47 million accounts data was shared , which came to a huge figure of $ 4.9 trillion, about half of Gabriel's $8.7 trillion prediction.The crucial positive outcome was that tax authorities could collect additional tax revenue of $ 95 billion from OECD member countries ,which is about 20 % of Nicholas's estimate of global corporate tax evasion .
India is a big offender & the present government, had a major election promise of getting back ill gotten wealth, stashed away abroad.How far it reveals the outcomes, after being in power for over 5 years, & how much it conceals,only time will tell.
Nobel Laureates need to do RCTs to find out how effectively real govt action ,can help to lift all the existing millions , above the poverty line.
If abundance exists , why not apportion it equitably??....a billion $ question.
