Form of words:
TeaThat’s the main thing about the money, Bud,” Hal Holbrook tells Charlie Sheen in the film. wall Street, “is that it makes you do things you don’t want to do.” The film was a morality drama on greed and high finances; Instead, it apparently turned out to be an unintended recruitment advertisement for real-world Wall Street! So much for ethics and finance. But as an international consortium of journalists uncovers a “Pandora” list of burglaries lurking in tax havens, accountability becomes the call of the day. What we get in return is hypocrisy.
US President Joe Biden addressed Congress calling for Switzerland, the Cayman Islands and others to be tax havens. He forgot that privacy and tax-friendly US states such as Delaware and South Dakota are the “new Switzerland”, while the original Switzerland has ended its banking secrecy for corrupt money. Indeed, the US has used the Foreign Account Tax Compliance Act to report financial assets held by US citizens to other countries, while Washington in turn denies comparable compliance.
Britain’s overseas territories and dependencies on the Crown, such as Bermuda and the British Virgin Islands, are among the most important tax havens, and consequently one of the largest losers of UK tax revenue. But even as Conservative and Labor politicians point fingers at each other for joining Pandora lists, a new law to fix the tax haven is in the balance. And a controversial Russian businessman seeking approval for an energy link between Britain and France has donated money to every 10th Conservative MP.
India can teach them a thing or two: It has fixed the hole in the Mauritius tax, even as it has declared illegal foreign funding of political parties to be kosher, post-facto. The electoral bond scheme provides a neat side-step from any disclosure requirement, and there is no limit to how much parties can spend on elections.
People invest money in tax havens for a variety of reasons – secrecy, criminality, tax evasion or avoidance, estate planning through trusts, and as a safety net in the event of regime change in authoritarian countries. Some of this is legal, though perhaps unethical, and sometimes you don’t need a tax haven—Amazon’s Jeff Bezos and Tesla’s Elon Musk paid little or no taxes in a few years. But corrective action has started. Companies lurking in tax havens or low-tax entities like Ireland would have to consider the international move for a minimum corporate profit tax of 15 percent (the original proposal was 21 percent).
Read also: Modi, Yogi, Amarinder – Why are the weak performers popular among voters?
‘Money makes the world go round…’
What about Indians on the list? Most of them are relatively small business fry (the A-listers are innocent or have yet to be discovered) and dealt with in modest sums – a few million each. Some say he has put tax and monetary authorities in the picture. Many are non-residents and have not violated any law. But some well-known businessmen who have declared themselves bankrupt own huge wealth in tax havens. Perhaps more importantly, thousands of newly wealthy Indians have gained non-resident status in recent years, and have probably taken at least some money with them to tax havens like Dubai. Angoor says their reasons range from education and health care facilities to clean air and a friendly tax regime.
If one turns away from ethics, does all this matter in a macro-economic context? The money stashed in tax havens is estimated at between $5.6 trillion and $32 trillion, a number to make your eyes pop. A few years ago an International Monetary Fund (IMF) paper estimated the loss of tax revenue at $500-700 billion. It is large, but less than 1 per cent of global GDP. And it will shrink further if the UK and US close their loopholes. Their tax system could turn out to be the biggest beneficiary. But this is a rich man’s game, and the governments of the rich country are the most willing participants. It is sung in the film as Liza Minnelli and Joel Gray cabaretThe fever of Weimar Germany set in: “Money makes the world go round… That clinking, clanking sound“
By special arrangement with Business Standard
Read also: Perpetual crisis could put an end to China’s ‘miracle’ development
subscribe our channel youtube And Wire
Why is the news media in crisis and how can you fix it?
India needs free, unbiased, non-hyphenated and questionable journalism even more as it is facing many crises.
But the news media itself is in trouble. There have been brutal layoffs and pay-cuts. The best of journalism are shrinking, yielding to raw prime-time spectacle.
ThePrint has the best young journalists, columnists and editors to work for it. Smart and thinking people like you will have to pay a price to maintain this quality of journalism. Whether you live in India or abroad, you can Here.