Tax Haven Debate Rages On In The Guardian

by Jason Gorringe, Tax-News.com, London

05 October 2004

The debate sparked by a a September 21 report in the UK's Guardian newspaper entitled 'Havens that have become a tax on the world's poor', which suggested that the world's offshore jurisdictions are "locked in a desperate competition" to attract tax evaders from onshore countries, continues apace.

Representatives from two of the countries named in the report, Malta and Switzerland, wrote to the newspaper late last month to protest at its definition of their finance centres as tax havens.

However, in a letter published yesterday which is likely to enrage Malta, Switzerland, and the other jurisdictions dubbed as tax havens still further, Tax Justice Network steering committee member, John Christensen and tax policy advisor to the Network, Richard Murphy issued a response to their arguments.

"We note the letters from representatives of the Maltese and Swiss governments...in which both countries protest that they are not tax havens. The claim is based on the fact that the money they handle is 'clean'," the two men wrote, continuing:

"The Tax Justice Network would not dispute that both territories have established systems to tackle money laundering. But that does not stop them being tax havens. They offer substantial incentives to previous non-residents to live in their territories and pay little or no tax. Both offer corporate structures that enable companies to divert their profits to their countries and avoid taxes elsewhere."

"We do not suggest tax haven activity is illegal. What is worrying is that so many countries and professional people around the world seek to divert income from one territory into another to avoid tax payments."

The letter concluded:

"They undermine the income stream of elected governments which should have received the tax due, and they divert vital revenues from the governments of many of the poorer nations of the world, which do not have the resources to challenge this activity. The result is that tax havens directly contribute to poverty worldwide and to the particular plight of developing nations, many of which are forced to incur massive debt because they are compelled by falling tax yields to borrow on the financial markets to finance revenue and capital expenditure."

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