David Cameron – UK Prime Minister
Prof. Jeffrey Sachs writing in the foreword of a report by ActionAid released May 23, 2013, described tax havens as “the biggest and most dangerous scams in the world economy,” calling on world leaders to end the practice.
As usual, at the ongoing G8 Summit in London, British Prime Minister, David Cameron is leading the G8 to pledge action against tax havens.
“When taxes are not collected, the poor suffer. In fact, illicit flows out of African countries exceed what they gain in aid,” said Cameron.
He said, “At the G8, I’m going to push for international agreements to fight the scourge of tax evasion and aggressive tax avoidance.”
The G8 always makes pledges but not much action when it matters. At the 2005 Gleneagles summit, the G8 pledged to provide an extra $25 billion a year for Africa as part of a $50 billion increase in financial assistance. But that never happened.
Tax havens are a source of drain on resource rich developing countries.
A report by the Tax Justice Network published in July 2012 showed that private banks are helping rich families and individuals move financial assets to tax havens.
It says the rich and their families have as much as $32 trillion of hidden financial assets in offshore tax havens.
The report by James Henry, former chief economist at consultants McKinsey & Co names UBS, Credit Suisse and Goldman Sachs as the three banks holding the most assets offshore on behalf of the global super rich.
And according to Prof. Sachs “The rich and powerful kept the public distracted when stock markets were rising and budgets were full. Yet the tax haven system was eating away at the roots of the world economy, making it increasingly easier for wealthy individuals, corrupt businesses, money launderers, political parties, and of course the ever-more-powerful banks, hedge funds, and multinational companies to protect their profits from taxation.”
Another report by the Global Financial Integrity says the African continent suffered an economic loss of between $597 billion and $1.4 trillion in a 30-year period from 1980 to 2009 in net resource transfers through licit and illicit ways.
“Between 1980 and 2009, the economies of Africa lost between $597 billion and $1.4 trillion in net resource transfers away from the continent,” said the report titled “Illicit Financial Flows and the Problem of Net Resource Transfers from Africa: 1980-2009?.
These transfers include both licit flows, such as investment, foreign aid, debt relief, and remittances moving into and out of the continent, and illicit flows, such as the proceeds of crime, corruption, and tax evasion moving out of the continent.
The G8 must do more than pledges, action is what is needed.
By Emmanuel K. Dogbevi/ghanabusinessnews.com