The Times reports:
Illegal transfers of billions of dollars from India to Western tax havens have become a big issue after two weeks of campaigning in the country’s general election.
As calls increase worldwide for a crackdown on the illicit movement of capital, L. K. Advani, the leader of the main opposition Bharatiya Janata Party (BJP), has vowed to repatriate as much as $1.5 trillion (£1 trillion), which he claims has been “looted” from India and moved overseas by corrupt officials, tax-shy members of the elite and leading companies over 60 years.
Mr Advani alleges that the money — worth more than the value of India’s economic output last year — lies in secret accounts in Switzerland and other countries. In a populist attempt to win votes in a month-long election that is at its midway point, he has vowed, if elected, to spend it on development.
As they also note:
Opponents say that Mr Advani wildly overstates the amount salted away, and other observers say that his claims are feasible, but impossible to verify. Either way, however, India is only one of many countries losing patience with clandestine offshore jurisdictions.
The source of all this discussion is Raymond Baker at Global Financial Integrity. I had dinner with Raymond last night. He seemed like a man very confident of his figures to me. And he’s right to be so: they’re based on the best data available using a range of the best techniques available.
Of course they don’t provide a precise answer. They can’t. But no one can provide precise figures for much of the data used for economic analysis — even GDP data is estimated, not precise. This has to be understood. What is however very clear to me is that the claims are simple rhetoric and without foundation:
Congress, the leading party in India’s coalition Government, admits that tax evasion is a problem, but claims that the BJP’s numbers are based on “bogus sources”.
The Swiss Bankers Association has said that the issue of tax havens has become “good election fodder”. It dismissed the numbers cited by BJP as “incredible”, but declined to provide its own.
In both cases, and as we have seen so often in the past when logical numerical analysis has been done on the best available data, the claim is dismissed as ‘wrong’. But no attempt to embrace the issue results. As a consequence those of us who have produced estimates of tax lost through tax haven activity are at present the suppliers of best estimates to the world. We may remain that way. Our calculations are based on the best data there is. And it shows, unambiguously, that the problem is massive. That’s enough, I think, to justify action and India is realising that is the case. Which is the good news in this.
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I too am delighted that tax evasion/avoidance and offshore are climbing up the political agenda in Majority World countries, including India. But on a purely political level, aren’t you slightly worried about providing political ammunition to the BJP? Of course, TJN and GFI’s figures are free to use by whoever wishes to use them, and I’ve no idea whether TJN or GFI are liaising directly with the BJP (the BJPs Advani was quoted in the Telegraph of India saying that “The [BJP] taskforce [on capital flight] is in touch with Raymond Baker and we are trying to work with him”, but this doesn’t indicate whether GFI agreed to cooperate).
But on the off-chance that such collaboration is on the cards, I’d very much hope that both TJN and GFI would refuse. The BJP isn’t just a non-progressive and increasingly neo-liberal (non-swadeshi) party, which should itself worry TJN: it’s a religiously fundamentalist party, many of whose leading figures support and sustain armed violence against its opponents. This is the party which introduced new school textbooks in 2002 which deleted historical references to non-Hindutva practices in the Indian past; and whose senior figure, Gujurat Chief Minister Narendra Modi, remains at the heart of the party despite credible evidence that Modi tacitly condoned the murder over over 1000 people in Gujurat in Hindutva-inspired violence in 2002; and that other BJP officials organised and participated directly in the attacks. This was violence, according to Human Rights Watch, which included disembowling pregnant women and forcing children to drink petrol.
A credible movement in the Majority World to end tax haven abuse is yet to be built; and as it’s built, I hope that TJN and CFI will choose its allies carefully.
WP
I share your concerns about the BJP.
TJN / GFI is not supporting the BJP or Congress or the Communists – who are also using this data
It is drawing attention to the issue
It is not our job to support parties in India
I also stress, those comments seen as political on this site are mine – not TJN’s – and I have worked with Conservatives, Greens, Lib Dems and Labour plus nationalists in the UK as evidence of that
Richard
I find it hard to believe that all this money is being sent out of India given that Currency exchange restrictions remain in place.
It is another thing entirely if this money is being earned by Indian Corporations outside India and not being remitted back home. That is a more plausible theory. However, if the money is earned outside India, it might be taxable, but by another jurisdiction.