Tax havens will be history in the future, and maybe sooner than they expect

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I have just recorded for Thomson Reuters in anticipation of Thursday's corruption summit and as a reaction to the letter from 300 economists.

The opening question sought to discover why I opposed tax havens. I gave two reasons (one has to be brief when doing these things). The first was that tax havens are deliberately designed to increase inequality in the world, and do so. Thart's because they permit those with wealth to opt out of taxation.

My second reason is that tax havens are deliberately designed to undermine the world's markets, whether they be for capital or trade. This is because market theory (and practice) requires that inf0rmation be available to all participants if they are to make the best possible decisions that will reduce risk, keep the cost of capital to the minimum poissible, allocate capital efficiently, and so maximise prodtcive invetsment and the consequnet opprtunities that can be created for people to enjoy. By creating opacity, delivberately, tax havens seek to udnermine this process.

In this twofold attack, one on the democratic right of governemtns to tax as they will in accordance with the mandate that they have, and the other on the right of markets to operate in the best interests of society tax havens pose a threat to the two pillars on which werstern society has been built. The charge sheet cannot be more serious than that.

Having explored these issues I was then asked a final question, which was what the world would look like of there were no tax havens. I suggested three things.

First, I said we could follow the money. And that would mean more tax would be paid by the right people, in the right place, at the right rate and at the riught time. This would reduce the tax gap, increase tax yield from the wealthy who owe it, reduce government deficits, increase social investment, raise productivity, end the need for austerity and transform the current state of government financing that has had so many pernicious conbsequnces for people around the world. We would all be better off as a reuslt.

But more than that, capital and trade markets would also be liberated to work to best effect. The risk in these markets would be reduced and the rate of return required on capital would fall as a consequnce. This would increase investment and the return to shareholders. Equyity markets could then peform their real task of allocating  capital to its most effective users. Growth would follow, and with it an increase in prosperity.

In other woirds, from whichever side of the debate you come, and from both (as I do) then the result of tackling tax havens is an increase in well-being for everyone in the world. I am unambiguous: I am sure that this is true. It is just about impossible for it to be otherwise and tax havens have no way on earth they can counter the argument.

All they can do is throw money at preserving the status quo. I was asked if I could see that status quo suyrving. I made clear that in 13 years of cmapigining we have seen massive change on this issue. And we will see a great deal more. The status quyo is dying. Tax havens will be history at some time in the future. And maybe sooner than they expect.