Tuesday, March 29, 2005

The Missing $11.5 Trillions from World Economy!!!

[Note: This news item needs to be looked in the perspective of UN Millenium Development Goals which puts a price tag estimated by World Bank, of around $40bn-60$bn till 2015 (i.e., maximum $600bn) needed to eliminate global poverty, improve health, provide universal education, etc. etc....]

Excerpts from a news item published in The Observer (Nick Mathiason, Sunday March 27, 2005):

"The world's richest individuals have placed $11.5 trillion of assets in offshore havens, mainly as a tax avoidance measure. The shock new figure - 10 times Britain's GDP - is contained in the most authoritative study of the wealth held in offshore accounts ever conducted.

The study, by Tax Justice Network, a group of accountants and economists concerned at the escalating wealth held in offshore locations, shows that the world's high-net-worth individuals earn $860 billion each year from their assets.

But there is growing alarm among regulators and campaigners because exchequers worldwide are missing out on at least $255bn of tax each year. Governments appear unable, or unwilling, to prevent the rich employing aggressive strategies to minimise their tax liabilities.

The OECD this weekend confirmed that international tax avoidance is a growing problem that troubles governments not just of rich countries, but middle-income ones as well.

'This is one of the defining crises of our times,' said John Christensen, co-ordinator of the Tax Justice Network and a former economic adviser to the Jersey government. 'One of the most fundamental changes in our society in recent years is how money and the rich have become more mobile. This has resulted in the wealthy becoming less inclined to associate with normal society and feeling no obligation to pay taxes.'

...Individuals such as Rupert Murdoch, Philip Green, Lakshmi Mittal and Hans Rausing - among the world's richest men - all make extensive use of tax havens."

The news item goes on to point out that:

"There is nothing illegal about placing assets and cash offshore.... The $11.5trn does not include the vast amount of money stashed in tax havens by multinational corporations, which are using increasingly sophisticated techniques to run rings round the authorities..."

So, what should one call this phenomenon?:
...money laundering? black money? finacial acumen?..

or just a symptom of a suicidal economic model?!!!



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