Saturday, April 4, 2009

Tax Havens - Thieves' Heavens

It's a while since I have revisited the them of development by omission. But the environmentalist George Monbiot recently wrote an article about tax havens and the effects they have on developing countries. Other commentators have taken up the same theme following a report by Oxfam which showed that developing countries could be losing as much as $124 billion, compared to the $103 billion they receive in foreign aid.

It is remarkable that at a time when human rights violations are being carried out on an unprecedented scale on the pretext that there is a 'war on terror', the very thing terrorists depend on, money, is nestling right under the noses of one of the countries claiming to be right behind that war.

Despite all the sanctimonius bilge that comes from British leaders and interested parties and the sycophantic toadying to the Americans, most tax havens are British. And they are doing very well, thank you for asking. The excuse for allowing rich people to keep their money where it cannot be taxed is that they will not invest in Britain if they have to pay tax. The fact is that their money stays out of Britain (and other country where they could be taxed) and only they stand to gain.

As for the difference between the leaders of developing countries, terrorists (or those presently called terrorists), multinationals, rich people and assorted criminals, I don't know. There is certainly one major similarity; where they do their banking. If Britain is so concerned about such behaviour and if they are really interested in protecting developing countries, they know what to do.

However, it seems they make too much money from the present system. They have spent decades reducing any regulation that would protect people from global level financial corruption. This simply means that they have become part of that corruption, they supply the infrastructure. And now that their deregulated system has collapsed, they are squealing like stuck pigs. Poor people have been forced to pay the bulk of countries' tax burden because rich people don't bother to pay any.

Development by omission, in this case, reform of tax havens, would do a lot more than the very expensive programmes that are presently referred to as 'aid'. Instead of pretending to build dams, irrigation and hydroelectricity installations for the benefit of people in developing countries when they are really giving fat contracts to their friends, British leaders could reform the very system that supports the impoverishment of poor people all over the world.

As is so often the case, it's not a matter of what developed countries can do for developing countries, it's a matter of what we can stop doing. Will the rich countries carry out the necessary reform? The G20 countries met recently and if they saw it as being in their interest to reform the system, they they may have discussed it. Otherwise, I don't see them giving up such a useful and profitable setup.


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