THE SCOURGE OF TAX HAVENS

Tax havens are the inevitable product of an unjust and corrupt economic system.

THE LEAK OF over 11 million confidential documents from the Panamanian tax avoidance firm Mossack Fonseca and the subsequent year long investigation by journalists around the world has thrown the spotlight well and truly on how the rich and powerful are hiding their wealth in tax havens - some of which are located in dear old New Zealand. Prominent people identified so far include China’s top leader, Xi Jinping, and his immediate family, Argentine president Mauricio Macri and the Icelandic Prime Minister, who has since resigned.

The vast scale of the leak - Mossack Fonseca claim they were hacked - suggests there will be further revelations to come.

While the wealthy - and the corporations - might not be breaking any laws, the use of tax havens simply increases the financial burden on ordinary people, in the form of further taxation - to make up for the fact that the wealthy and the corporations are not paying their fair share.

In his 2015 book The Hidden Wealth of Nations: The Scourge of Tax Havens, economist Gabriel Zucman estimates there is nearly $US8 trillion stashed away in tax havens. This is only an estimate, although based on considerable research, because the secrecy of these tax havens makes a more precise figure impossible.

Zucman says that 'The Panama Papers' reveal "...how deeply ingrained harmful practices and criminality are in the offshore world,"

It is no coincidence that the use of tax havens - and the tax avoidance industry that has grown up around them - has vastly expanded in an era of economic deregulation, privatisation, the globalisation of finance. It has been a win-win for the rich and powerful. Not only have they become vastly more wealthy, their economic dominance and the dominance of economic policies that advantage them, has provided further opportunities to hide away the wealth far away from the tax authorities.

In 2014 Oxfam estimated that corporate investment in tax havens have quadrupled since 2001.

Developing countries , according to Gabriel Zucman, lose at least $190 billion in tax revenues each year, because of the use of tax havens by  rich individuals and the corporations. And we need to be clear : many governments are complicit in sustaining this network.

Poorer countries in particular are the victims: they are deprived of funds to provide services like health and education, and to tackle poverty and extreme inequality.

In a briefing paper released in January this year, Oxfam estimated said that as much as 30% of all African financial wealth was thought to be held offshore. The estimated loss of $14bn in tax revenues would be enough to pay for healthcare for mothers and children that could save 4 million children’s lives a year and employ enough teachers to get every African child into school.

The use of tax havens is, quite literally, killing children.

In the end, this corruption cannot be separated from the economic system that has spawned them. Tax havens reinforce just how wildly wrong are those who continue to talk of a 'socially responsible capitalism' or even a 'post capitalism' of the so-called 'Fourth Industrial Revolution'. Tax havens are the real face of capitalism.