Raphaëlle Delmotte, intern at UNESCAP in Bangkok.
“There is a building in the Cayman Islands that houses supposedly 12,000 US-based corporations. That’s either the biggest building in the world or the biggest tax scam in the world, and we know which one it is.”
President Obama gives us an idea of the ridiculous proportions that tax evasion has reached in this quote.
Major companies and rich individuals evade home taxes by transferring massive amounts of revenues to offshore centres and tax havens where little or no tax is levied (this is often accompanied by a banking secrecy principle).
Bleak growth forecasts, angry taxpayers and skyrocketing unemployment have broken the governments’ silence on tax evasion. Additionally, poor economic growth forecasts, investment fraud and Ponzi schemes have further channelled public anger and outrage towards doubtful banking practices. The opacity and secrecy of the Cayman Islands, Andorra or the Virgin Islands banking systems – renowned tax havens – provide ideal sheltered banking environments allowing tax fraud and Ponzi schemes to take place, out of the reach of European and US fiscal authorities and regulators.
Although it would be far-fetched to hold tax havens responsible for the financial crisis, it is the morality and sustainability of opaque banking systems that come into question here. These small states that have found a niche market in offshore banking, shrouded in secrecy, are the embodiments of financial practices that are part of what went wrong on Wall Street. Perhaps you could call this the ‘Madoff effect’.
As the world faces a recession, questions about financial practices abound. In the face of populist outrage and the non-cooperation of tax havens, governments are taking action to ensure that integrated financial markets and banking do not translate into immoral tax evasion.
Furthermore, those lost tax dollars are needed more than ever – and no one knows that better than the new US administration, whose budget deficit will set new records.
As Senator Dorgan puts it: “Americans were told you have to pony up some money to help these companies. And it’s rather infuriating for them to find out now that those companies, when they were profitable, didn’t want to pay taxes and found clever ways to hide their money overseas.”
The US government attacked UBS, the Swiss bank, accusing it of having deliberately attracted rich taxpayers from the US to deposit funds within its bank and thus evade taxes. France and Germany have also put pressure on Switzerland and other European tax havens to cooperate when researching tax evaders. If no improvement was observed during the G20 Summit, French President Nicolas Sarkozy had threatened to quit his position as Andorra’s co-Prince, shaking a tradition that dates back to 1278.
As much as the financial crisis is doing immense harm to our economies, it has at least served one good purpose: revealing and perhaps putting an end to these shameful practices, that are nothing less than outright theft from our nations’ budgets.
To believe that this is the end of tax heavens would be naïve. National sovereignty remains; states are free to set their tax policies. What can be done is preventing them from turning their low levels of taxation into lucrative businesses. Further progress was a topic at G20. But even if some give in, others remain and will keep attracting companies and individuals who want to avoid paying tax. Should tax havens agree to cooperate significantly with the U.S. and European countries, and it seems that most will, outrageous statistics might decrease, with a reasonable amount of money either recovered or prevented from flowing offshore in the future. ■
Ponzi scheme? Madoff?
U.S. Citizen Bernard Madoff is a former businessperson who was convicted of operating a Ponzi scheme (fraudulent investment) that has been called the largest investor fraud ever committed by a single person.
“There is a building in the Cayman Islands that houses supposedly 12,000 US-based corporations. That’s either the biggest building in the world or the biggest tax scam in the world, and we know which one it is.”
President Obama gives us an idea of the ridiculous proportions that tax evasion has reached in this quote.
Major companies and rich individuals evade home taxes by transferring massive amounts of revenues to offshore centres and tax havens where little or no tax is levied (this is often accompanied by a banking secrecy principle).
Bleak growth forecasts, angry taxpayers and skyrocketing unemployment have broken the governments’ silence on tax evasion. Additionally, poor economic growth forecasts, investment fraud and Ponzi schemes have further channelled public anger and outrage towards doubtful banking practices. The opacity and secrecy of the Cayman Islands, Andorra or the Virgin Islands banking systems – renowned tax havens – provide ideal sheltered banking environments allowing tax fraud and Ponzi schemes to take place, out of the reach of European and US fiscal authorities and regulators.
Although it would be far-fetched to hold tax havens responsible for the financial crisis, it is the morality and sustainability of opaque banking systems that come into question here. These small states that have found a niche market in offshore banking, shrouded in secrecy, are the embodiments of financial practices that are part of what went wrong on Wall Street. Perhaps you could call this the ‘Madoff effect’.
As the world faces a recession, questions about financial practices abound. In the face of populist outrage and the non-cooperation of tax havens, governments are taking action to ensure that integrated financial markets and banking do not translate into immoral tax evasion.
Furthermore, those lost tax dollars are needed more than ever – and no one knows that better than the new US administration, whose budget deficit will set new records.
As Senator Dorgan puts it: “Americans were told you have to pony up some money to help these companies. And it’s rather infuriating for them to find out now that those companies, when they were profitable, didn’t want to pay taxes and found clever ways to hide their money overseas.”
The US government attacked UBS, the Swiss bank, accusing it of having deliberately attracted rich taxpayers from the US to deposit funds within its bank and thus evade taxes. France and Germany have also put pressure on Switzerland and other European tax havens to cooperate when researching tax evaders. If no improvement was observed during the G20 Summit, French President Nicolas Sarkozy had threatened to quit his position as Andorra’s co-Prince, shaking a tradition that dates back to 1278.
As much as the financial crisis is doing immense harm to our economies, it has at least served one good purpose: revealing and perhaps putting an end to these shameful practices, that are nothing less than outright theft from our nations’ budgets.
To believe that this is the end of tax heavens would be naïve. National sovereignty remains; states are free to set their tax policies. What can be done is preventing them from turning their low levels of taxation into lucrative businesses. Further progress was a topic at G20. But even if some give in, others remain and will keep attracting companies and individuals who want to avoid paying tax. Should tax havens agree to cooperate significantly with the U.S. and European countries, and it seems that most will, outrageous statistics might decrease, with a reasonable amount of money either recovered or prevented from flowing offshore in the future. ■
Ponzi scheme? Madoff?
U.S. Citizen Bernard Madoff is a former businessperson who was convicted of operating a Ponzi scheme (fraudulent investment) that has been called the largest investor fraud ever committed by a single person.
0 comment(s) to... “The end of the tax haven honeymoon”
0 comments:
Post a Comment