“The wealth, power, and illegality enabled by this hidden system are now so vast as to threaten the global economy’s legitimacy.” –Jeffrey Sachs (2011)
“The magistrates are like sheriffs in the spaghetti westerns who watch the bandits celebrate on the other side of the Rio Grande … They taunt us—and there is nothing we can do.” –Eva Joly
“We don’t pay taxes. Only the little people pay taxes.” –Leona Helmsley (Property Heiress)
On hearing the term ‘tax haven,’ many will picture idyllic locales with long beaches, palm trees and yachts belonging to multi-millionaires like the Cayman Islands, a British Overseas Territory in the Caribbean Sea. The more mundane reality, however, is laid out in the ‘financial secrecy index‘ compiled by the Tax Justice Network in 2013.
Unimaginably vast sums of financial wealth sit in the 82 jurisdictions listed. The Tax Justice Network explains:
An estimated $21 to $32 trillion of private financial wealth is located, untaxed or lightly taxed, in secrecy jurisdictions around the world. Illicit cross-border financial flows add up to an estimated $1-1.6 trillion each year. Since the 1970s African countries alone are estimated to have lost over $1 trillion in capital flight, dwarfing their current external debts of ‘just’ $190 billion and making Africa a major net creditor to the world. But those assets are in the hands of a few wealthy people, protected by offshore secrecy, while the debts are shouldered by broad African populations.
Yet rich countries suffer too: in the recent global financial crisis, European countries like Greece, Italy and Portugal have been brought to their knees by decades of secrecy and tax evasion.
A global industry has developed involving the world’s biggest banks, law practices and accounting firms which not only provide secretive offshore structures to their tax- and law-dodging clients, but aggressively market them. ‘Competition’ between jurisdictions to provide secrecy facilities has, particularly since the era of financial globalisation took off in the 1980s, become a central feature of global financial markets.
Back in the early days of the Occupy movement, The Guardian’s George Monbiot wrote an article detailing the practices of the undemocratic and unaccountable Corporation of the City of London and how it ‘exists outside many of the laws and democratic controls which govern the rest of the United Kingdom.’
Monbiot asks: “What is this thing?”
Ostensibly it’s the equivalent of a local council, responsible for a small area of London known as the Square Mile. But, as its website boasts, “among local authorities the City of London is unique”. You bet it is. There are 25 electoral wards in the Square Mile. In four of them, the 9,000 people who live within its boundaries are permitted to vote. In the remaining 21, the votes are controlled by corporations, mostly banks and other financial companies. The bigger the business, the bigger the vote: a company with 10 workers gets two votes, the biggest employers, 79. It’s not the workers who decide how the votes are cast, but the bosses, who “appoint” the voters. Plutocracy, pure and simple.
Several governments have tried to democratise the City of London but all, threatened by its financial might, have failed. As Clement Attlee lamented, “over and over again we have seen that there is in this country another power than that which has its seat at Westminster.” The City has exploited this remarkable position to establish itself as a kind of offshore state, a secrecy jurisdiction which controls the network of tax havens housed in the UK’s crown dependencies and overseas territories. This autonomous state within our borders is in a position to launder the ill-gotten cash of oligarchs, kleptocrats, gangsters and drug barons. As the French investigating magistrate Eva Joly remarked, it “has never transmitted even the smallest piece of usable evidence to a foreign magistrate.” It deprives the United Kingdom and other nations of their rightful tax receipts.
Tax havens are a key means of escape for the rich and powerful from the rules that bind ordinary citizens, from the law of the land(s) itself. They enable rich people and companies to avoid paying their fair share for the very infrastructure they depend upon for their financial success: the roads that transport their products, the courts that protect and uphold their contracts, the education systems that prepare their work forces and the health systems that keep staff healthy.
And the police forces that protect their premises and persons from protesters.
According to a (highly recommended) website dedicated to providing information on this issue, there are 18,857 companies registered at one address in the Cayman Islands and 217,000 registered to a ‘1209 North Orange Street, Wilmington, Delaware,’ including Coca Cola, Google, Verizon, KFC, American Airlines and GM. We also learn that 83 of the largest 100 US companies use tax havens, as do 98% of the companies registered on the London Stock Exchange.
Aside from the fact that tax havens enable the rich to hide money that they are legally obliged to pay for the vital public services that societies need to survive, they also ultimately force the poor to pick up the tab. Tax havens further enable financial criminals to hide their booty; corrupt leaders or dictators to plunder the resources of poor and/or developing nations; and also allow banks to dodge financial laws. They create a private world of unaccountable power for the very rich, enabling them to do as they wish as the rest of the planet’s inhabitants slide deeper and deeper into inequality, poverty and suffering.
In November 2011, when the Tackle Tax Havens campaign was launched, a study it carried out revealed that more than $3.1 trillion in tax is evaded, 4.9% of the world’s GDP at that time. It also found that in the UK ‘a staggering £69.9bn is illegally kept from the exchequer every year, equivalent to 79.8% of the NHS budget.’
Meanwhile, a report in the Guardian last month warned:
NHS finances in crisis due to rising demand and budget cuts – double pressure on the service could cause £30bn deficit by 2020 – and parties’ extra cash pledges won’t be enough
The study further noted that ‘the United States loses $337bn to tax evasion … more than any other nation. In second place is Brazil which loses $280bn and third is Italy losing $238bn.’
A neutral watchdog media would pounce on these shocking, criminal statistics and rightly declare them a crime against humanity, but the media was bought long ago by the very same people exploiting the legal loopholes that allow this travesty to occur. Instead, the tabloid media piles on the poor and vulnerable, smearing them relentlessly as lazy or ‘feckless’ people who thieve from the welfare system paid for by honest taxpayers, despite knowing that such smears are not only lies but dangerous. Six of the UK’s largest charities report that they are regularly contacted by disabled people who are taunted on the street for faking benefits, leading some to live in constant fear and shame. Hate crimes have risen and disabled people have either thought about or actually committed suicide in this climate of poisonous, concocted persecution.
The editors of the Daily Mail and other tabloids are also perfectly well aware that benefit and tax credit fraud in the UK accounts for under £1.6 billion in total, less than 1% of the overall benefits and tax credits expenditure and less than benefits underpaid and overpaid due to error.
Compare these numbers with the tax evasion statistics to see precisely where the loyalties and priorities of the mainstream newspapers lie. The result: a study this year revealed the British people falsely believe that the rich pay most in tax.
The more high-brow media vanguards? Unfortunately many of the ‘liberal-left’ voices one would expect to speak up against tax havens are too busy pouring intellectual snobbery on Russell Brand for the capital crime of actually trying to raise awareness of and do something about tax justice among other things.
These increasingly hysterical displays of desperation are easy to explain: millions globally are now awakened to tax havens and other issues of social injustice, rising up and demanding radical change. Podemas in Spain, a political party born out of the Indignados movement, is now the leading political force in the nation. This echoes the success of other radical parties like Beppe Grillo’s Five Star movement, which won 25.55% of the national vote in Italy’s last national elections. These sentiments now reflect wide swathes of both the ‘developed’ and ‘developing’ world and there is unlikely to be any sympathy for the high-profile stenographers who kept their silence on these issues and ridiculed dissent while their paymasters looted and wasted the planet.
The UK, one of the richest and most powerful nations on the planet and a self-proclaimed champion of human rights and democracy, saw this year a precipitous 163% rise in the use of food banks to a million children and adults, leading charities to accuse the UK government of violating the ‘human right to food.’ Meanwhile, as the UK government drives on with its ‘austerity’ cuts, tax evasion continues rampant and unchallenged.
Crossposted from the 99.99998271%.
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