The next time anyone tries to convince you of the need to cut benefits to the unemployed or there is not enough money to care for refugees, consider this:
An estimated $21 to $32 trillion of private financial wealth is located, untaxed or lightly taxed, in secrecy jurisdictions around the world. Secrecy jurisdictions – a term often used as an alternative to the more widely used term tax havens – use secrecy to attract illicit and illegitimate or abusive financial flows.
Illicit cross-border financial flows have been estimated at $1-1.6 trillion per year: dwarfing the US$135 billion or so in global foreign aid.
A global industry has developed involving the world’s biggest banks, law practices, accounting firms and specialist providers who design and market secretive offshore structures for their tax- and law-dodging clients. ‘Competition’ between jurisdictions to provide secrecy facilities has, particularly since the era of financial globalisation really took off in the 1980s, become a central feature of global financial markets.”
The UK is the Worst Offender
The UK is regarded by Tax Justice Network (TJN) as one of the biggest, if not the biggest, single player in the global offshore system of tax havens (or secrecy jurisdictions) today.
There are two reasons for the discrepancy between its ranking and its importance.
The first is that the City of London, or “the City”, a term used to describe the UK financial services industry centred on London, is on some measures the world’s largest financial centre. As this report explains, this is built substantially on ‘offshore’ characteristics – though these characteristics in the UK’s own case aren’t particularly predicated on financial secrecy but on other offshore offerings, particularly lax financial regulation.
The second is that the UK is intricately connected to a large network of British secrecy jurisdictions around the world, notably the three Crown Dependencies (Jersey, Guernsey and the Isle of Man) and the 14 Overseas Territories, which include such offshore giants as Cayman, the British Virgin Islands and Bermuda.
Though these jurisdictions have a measure of independence on internal political matters, Britain supports and controls them: the Queen appoints many of their top officials, and her head is on their stamps and banknotes. Illustrating the fact that these links are above all financial, Jersey Finance, the official marketing arm of the Jersey offshore financial centre, states that:
“Jersey represents an extension of the City of London.”
Overall, the City of London and these offshore satellites constitute by far the most important part of the global offshore world of secrecy jurisdictions.
Had TJN lumped them together, the British network would be at the top of their index, above Switzerland. (In fact, the British network is even bigger than this ‘official’ network, and includes 54 Commonwealth countries, many of whose final court of appeal is at the Privy Council in London.)