Wednesday, 6 April 2016

'Offshore' Centres and Tax Havens

Apart from naming some interesting names, the latest Panama files on tax dodging add little to what was already widely known. However, the media furore is fuelled by the desperate hope that getting back some ill-gotten, or non-taxed, funds into the national pot will cushion the iron heel of austerity.

It is worth noting that the term 'tax haven' is not as unambiguous as it might seem. Apart from the many, often small countries, principalities or islands that have low taxes, what about the complex rules on taxation that the wealthy can use in most countries, notably the UK, to avoid any embarrassment of their riches? Wikipedia has a fairly comprehensive coverage here and here.

Meanwhile, I consider it my civic duty to inform readers that Panama is a mere pimple on the arse of capitalism when it comes to being an 'offshore centre', another designation for tax havens. The chart below sums up the outstanding stock of international claims (basically lending to or investing in another country) and liabilities (borrowing from another country) of the main offshore centres. These are the latest data available, measured in billions of US dollars, for end-September 2015. I have marked out in red the centres that have a close link to the UK, the ones designated as 'UK offshore' such as Jersey, and also those whose citizens sing 'God Save the Queen' as their national anthem, the biggest one being the Cayman Islands.

Now isn't it interesting that the UK is tied up with most of these. Hong Kong and Singapore also have close UK links. These are among the issues covered in my new new book, out next week.

Tony Norfield, 6 April 2016

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