August 2012        

Time to end the tax haven scam!

The appearance in court of some of the leading perpetrators of the Anglo-Irish Bank scam brings into focus once again the sociopathic role of banks and finance houses in the management of late capitalism’s financial affairs, both in Ireland and throughout the world.
     Such scamster manipulations are central to a system so rigged by criminal parasites that the super-rich become even richer, here as elsewhere, as the rest of the population experience living standards in free fall.
     Unjust appropriation by the rich of the lion’s share of the social product is aided and abetted by financial scamsters who promote that perfect tax evasion dodge: the tax haven.
     These refuges allow transnational corporations and the super-rich to benefit from the onshore benefits of tax—infrastructure, education, and security—while using these offshore havens (or basing their business abroad, like Sir Bono) to escape their responsibilities to pay for them. The working class picks up the tab.
     Tax havens offer not only low or no taxes but also provide facilities for people or entities to get around the rules, laws and regulations of other jurisdictions, using secrecy as their prime tool.
     So tax havens, by depriving state coffers of revenue, heighten inequality and poverty, corrode democracy, distort markets, undermine financial regulation and curb economic growth, accelerate the flight of capital from poor countries, and promote corruption and crime globally. They are often a blind spot in our understanding of the manoeuvres of contemporary capitalism.
     Are we exaggerating the extent of the problem?
     According to a new report from a British group, Tax Justice Network (based mainly on data from the World Bank, the IMF, and the United Nations), at least $21 trillion—and possibly as much as $32 trillion—sits in untaxable offshore accounts, for example in the Cayman Islands. That’s roughly the size of the American and Japanese economies combined. And the figure includes only financial wealth, not real estate, yachts, or other assets held abroad.
     In 2010 the world’s fifty biggest private banks managed more than $12.1 trillion in cross-border funds, up from $5.4 trillion in 2005, as the super-rich availed themselves of the benefits of increasingly deregulated markets.
     This vast offshore wealth belongs to a group of 10 million people—about 0.001 per cent of the world’s population—according to the report. This amounts to about a third of total global assets. It is ten times what is needed to meet the UN Millennium Development Goal of halving world poverty by 2015. This much money could also pay to transform the world’s energy infrastructure to tackle climate change.
     Such progressive uses of this vast hoard of criminally appropriated wealth, however, await the replacement of the present chaotically deregulated finance markets by a fully transparent, democratically accountable economic system—with the consequent disappearance of tax havens—in which all financial transactions are subject to rigid regulation.
     Without such a necessary first step in the construction of a new, just and egalitarian national and world order, the path to socialism will never be trodden.

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