7 October 2011

The 2011 Financial Secrecy Index published this week reports on the 73 “worst” jurisdictions that tolerate billions of dollars being banked offshore, losing about $250 billion annually in tax revenue for the source governments. New Zealand almost made this list of corrupted states that Nicholas Shaxson criticises for institutionalising tax evasion. Earlier this year, he predicted that before long, it would be counted among the rogues. This week’s report comments that “in subsequent FSIs we will include more jurisdictions needing serious scrutiny, such as New Zealand.”

Switzerland, the “grandfather of the world’s tax havens,” tops the index, although there has been minor erosion recently of its long established bank secrecy and willingness to receive unusually large cash transfers from questionable sources. Its neutrality and safe haven status will not be readily surrendered.  Other countries provide greater secrecy than Switzerland but rank lower because the smaller size of their banking sectors. Conversely, large banking countries like Germany and Japan are high on the list although less secretive.. The others making up the worst five tax havens, are the Cayman Islands, Luxembourg, Hong Kong and United States.

The growing concern about tax havens is not just the forgone revenues. “Secrecy distorts trade and investment flows, and creates a criminogenic environment for a litany of evils that hurt the citizens of rich and poor countries alike: fraud, evasion and avoidance of financial regulations, insider dealing, embezzlement, wholesale bribery, non-payment of alimony, money laundering, tax evasion and much more besides.”

New Zealand just missed inclusion this year, but Samoa, Nauru, Cook Islands, Vanuatu are on the index..  A concern must be the number of small island states that see tax haven status as an advantage, despite the accompanying “litany of evils”.

www.financialsecrecyindex.com/

integritytalkingpoints.com/2011/04/15/new-zealand-playing-offside/

http://treasureislands.org/

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