Tax havens most dangerous scam in world economy – Sachs

Jeffrey SachsA world renowned economist has called for the end of tax havens in the world economy.

In his foreword in a new ActionAid report released May 23, 2013, Professor Jeffrey Sachs, Director of the Earth Institute at the Columbia University, described tax havens as “the biggest and most dangerous scams in the world economy.”

The ActionAid report titled “How Tax Havens Plunder the Poor” was published ahead of the upcoming G8 Summit this June in London as world leaders deliberate on how to curb the menace.

According to Prof Sachs, these havens facilitate tax evasion, money laundering, bribery, and lack of accountability for environmental and social calamities.

“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,” Prof Sachs wrote.

It is believed that most of these tax havens keep moneys in secret bank accounts in countries that allow such deals.

Prof Sachs mentioned that The Caymans have around 57,000 people, but 92,000 companies and the “Bank of International Settlements (BIS) estimates that $1.4 trillion in bank assets and liabilities are there”.

“This is a time bomb, not a financial system,” he added.

Prof Sachs who was not surprised, said the so-called “boards” of many tax haven shell companies are routinely filled with individuals who sit on dozens, or even hundreds of boards. He stated: “The governance situation is absurd, dangerous, and out of control.”

Prof Sachs continues, “Developing countries are also saying that enough is enough. For decades they’ve been on the receiving line of lectures about good governance.”

The tax havens have served the purpose of paying bribes to potentates, and providing easy ways for elites in poor countries to keep their money safe from tax collectors, he added.

By Ekow Quandzie

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