A third to a half of the world's tax havens in Europe?
"About fifty tax havens exist around the world, about half in Europe. By "tax haven" I mean a state where there is a very low level of taxes. This state practices secrecy and refuses all co-operation with other countries."
A couple of points about this. First, we recently said in The Guardian newspaper that tax havens provide not one, but three things: low or zero taxes, secrecy, and lax regulation. Lebègue is right and we should add a fourth, which one could treat as separately from the third: a refusal to co-operate with other jurisdictions (see some of the quotes from Eva Joly, for example, to get an idea of how serious this problem can be.) There is some disagreement about how many of these criteria a country needs to exhibit to be called a tax haven, and note that these places (secrecy jurisdictions, we often prefer to call them) routinely try to pretend that they are not tax havens.
Second, it may come as a surprise to see him saying that about half the world's tax havens are in Europe. We have a slightly larger list, on p36-37 of this document, showing 26 European tax havens (which would add up to over half his 50 havens, though our list contains 73 such places, giving the European ones a one-third share of the global total.) This makes the recent remarks by the crime-fighting French magistrate Renaud van Ruymbeke, who said Europe should first "clean out its own rubbish" in the fight against tax havens, especially pertinent. As an aside, TJN recently reduced the number to 72 after removing Nauru, which appears to have changed its ways. As another aside, the methodology used for calculating the number of tax havens involved looking at whether or not jurisdictions carried out effective information exchange (that is, automatic exchange of tax and other information with other jurisdictions) and whether they met the "economic substance" test: that is, non-resident companies must have some real economic substance within the jurisdiction; the OECD dropped its economic substance test some time around 2000, under strong pressure from the International Trade and Investment Organisation (ITIO,) a powerful tax haven lobby group with especially strong British interests.
"Among the 50 sure-fire tax havens there are also banking and financial havens: that is to say states where financial actors are set up and which operate outside all surveillance, and in complete opacity. Four thousand banks are set up there. . . tax havens represent a considerable risk for the international financial system. And hedge funds, two thirds of which are registered in tax havens, are feeding the financial crisis since investors no longer have confidence in these opaque and unsupervised actors."
And he adds:
"There will be no remaking of the international finanancial system, that is to say more transparency, if we leave the black hole of tax havens to persist. Half of international financial transactions transit through them, in effect. The current crisis gives strength to those who want to finish with clandestine finance.
To put things in order, it is necessary now to establish rapidly a list of non-co-operative countries. We will then ask that state no longer provide guarantees or aid to banks which have their headquarters in tax havens, like UBS or Credit Suisse. The same for companies. Why should France provide export credit for companies whose headquarters are situated in the secrecy jurisdictions? And it is necessary to forbid the distribution of hedge funds which do not give information about their shareholdings, their risks, and their off balance sheet financing."