Jeff Sachs in FT: The havens serve countless purposes; not one is for the social good

Jeffrey Sachs has an excellent article in the Financial Times this morning, entitled Austerity exposes the global threat from tax havens. A very apt title it is too.

Tax Justice issues is now being taken seriously by mainsream economists (also see this), other academics, geographers, lawyers, environmental campaigners, people interested in international development (and this latest article about Africa from Richard Dowden is a good one) - you name the field, and there are almost certainly a bunch of its brightest stars diving in. We've been told recently that in Westminster (a term taken to refer to the goldfish bowl of British national politics) a realisation has sunk in that 'tax justice is now a talking point in pubs' - which is, we think, some kind of tipping point, and it's having an effect (with this just one of many recent examples).

Anyway, back to Sachs.

"How much tax revenue is lost to the global havens? Here, too, we can only guess but the numbers are likely to be vast. Recent estimates by the Tax Justice Network suggest that deposits are in the range of $21tn."

Indeed, and those estimates, and all supporting documentation, are here. And now Sachs sticks his neck out:

"The havens serve countless purposes, yet not one is for the social good."

We can just imagine Mr. Angry in the Cayman Islands firing off furious, fiery fusillades to the FT to follow this one. He probably will, too. But Sachs is absolutely right here.

All the supposedly helpful facilities provided by tax havens could be provided in other ways, but without the collateral damage that inevitable comes as part of the package - and most of those 'benefits' turn out not to be so beneficial after all, once you unpack what is really happening. We have made versions of this point many, many times in the past; perhaps the most comprehensive collection of these points is available in a page entitled "Tax havens’ arguments in their defence – and why they are wrong."

He identifies the UK, the US and Switzerland as the top three players in the system - that's spot on, in our subjective judgement, even though our Financial Secrecy Index, which takes a more pernickety number-crunching approach, puts Luxembourg at Number 3.

And he identifies systemic risks to the global economy posed by tax havens. Quite so, indeed. And a whole lot more on that particular subject, here.

We haven't always agreed with everything Sachs has said. But on our home turf, we are in full agreement. Read the rest of the FT article here.