Tax havens: The Economist comes in from the cold

Well, after a fashion. Three years ago The Economist magazine ran an appalling cover story (and series of inside stories) that was fulsome in praise of tax havens. It briefly quoted TJN, then dismissed our work with an airy sneer. (We blogged it here, here and here.)

Since then, however, as the global financial crisis has helped made clear the extent and range of damages caused by tax havens, and a major shift in the public mood, we have noticed the magazine making a slow move (albeit with hiccups) towards far more reasonable and balanced articles on tax havens, or secrecy jurisdictions.

Their latest article is a humdinger. It's a really, really good piece of work, and it follows a highly succesful conference last week in Paris looking at our issues, headlined by the economist Jeffrey Sachs.

Here is how it starts:

ONE criticism made of the Occupy Wall Street movement, a gathering of anti-bank protestors now three weeks old, is that it has not made its grievances clear. Something the great unwashed might chant more about is the damage done by offshore finance. Global Financial Integrity, a civil-society group, calculates that more than $1 trillion a year flows illicitly out of developing countries, far more than flows the other way in aid.

Much of this departing money goes to tax havens and jurisdictions with high levels of financial secrecy, sent there by criminals, corrupt politicians or tax-dodging individuals and multinational companies. Banks in Europe and America profit handsomely from these flows—indeed, many are themselves heavy users of tax havens as a way to reduce their tax bills.

Not only are western banks knee-deep in offshore shenanigans, but some supposedly upstanding G20 jurisdictions rank poorly when it comes to transparency, a fact bleakly confirmed by the latest global financial-secrecy index, released this week by Tax Justice Network.

And we would highlight the sentence at the very end:

Expect the pace of change to quicken over the next year or two.

We couldn't agree more. Now read on.