It’s your turn
March 3rd, 2010
March 3rd, 2010
If you’ve read any of my blog posts, you know a thing or two about illicit financial flows, development, and tax havens.
I’ve told you about how developing countries lose US$1 trillion a year to illicit financial flows, which is more than what the developing world spends on health care and 500 times what the World Bank spends on emergency food aid. I’ve shown how banking secrecy feeds into the problem of corruption, as dictators like Teodoro Obiang are able to steal hundreds of millions of dollars from their people and then are able to hide it in American banks.
I’ve illustrated how greedy multinationals can use trade mispricing to sell tweezers for $4,896 and razor blades for $113, shift profits to tax havens or developed countries, evade their taxes, and leave developing country governments out to dry. I’ve shown how those flows of money reduce the growth potential of developing countries by diverting domestic savings away from investment.
I’ve presented examples of how that loss of money can affect developing country governments, like Thailand, Moldova, Mali, and Costa Rica, each of which has a government struggling to eradicate disease, improve education, and lift thousands out of poverty. But their efforts are hampered by a shortage of funds and mountains of public debt, which only make these countries more dependent on aid, thereby fueling a never ending vicious cycle. Yet if each of these countries—and so many more— were able to reclaim the lost tax revenue due to trade mispricing, they would have a drastically improved situation.
I’ve revealed the damaging effects of abusive transfer pricing, with companies such as Citigroup and Morgan Stanley, who relied on the American government’s pocket book in their time of need, but still maintain hundreds of subsidiaries in tax havens. I’ve told you that the American government loses $100 billion a year to tax evasion as a direct result of tax havens, and that in 2004 American corporations paid an effective tax of just 2.3% on profits. I’ve shown how tax havens like the Cayman Islands contributed to the 2008 financial crisis, by incorporating hedge funds and investment banks and then failing to regulate their operations and risky financial instruments.
I’ve finally demonstrated how banking secrecy can erode our national security, as Iran uses its co-conspirator, Venezuela, and tax havens like Panama to deposit money in Manhattan—money which can then be used to pay for banned missile and nuclear materials.
Banking secrecy is dangerous. It erodes development. It contributes to global financial instability. It exacerbates income inequality. It worsens our budget deficit. It makes developing economies more aid dependent. It compromises international security. Over the last year I have shown you all of these things.
So now I’m going to ask you do something. Watch our web ad and then sign the G20 transparency petition to fight poverty, protect human rights, and demand transparency in international banking. It’s your turn to lend your voice to change. And it’s our chance to make a difference.