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Economy

ORIGINAL FRENCH ARTICLE: Les paradis fiscaux renforcent toujours plus la dette publique

by Thierry Brugvin

Tax havens continue to deepen public debt

Translated Thursday 16 April 2015, by Adrian Jordan

By Thierry Brugvin, member of the scientific council of Attac and author (1).

The film l’Enquête was released in February, telling the story of the notorious scandal exposed by journalist Denis Robert. However, despite all the government talks for the abolition of fiscal havens, real change advances at a very slow pace.

Now, tax evasion weighs on the public debt, which is, in fact, the principal method of control of private banks and financiers over state and people.

The public debt allows direct influence over governmental policies, the establishment of austerity in the north, having previously brought about structural adjustment plans in the south. If states fail to comply, the financiers raise the interest on future loans. This burdens and increases the weight of debt. Fraud and tax evasion committed by the economic elite damage the Rule of Law and, therefore, democracy. In 2011, in France, debt repayments represented 15% of the state budget. In 2010, the state budget was 319 billion euros; it is estimated that loss of revenue due to tax evasion via tax havens was 40 billion euros (12%) and tax fraud 18 billion euros (5%), around 2.5 times the budget deficit (7%), according to SUD Solidaires.

Tax havens allow massive illegal financial flows, embezzlement and money laundering by the banks. Tax havens and clearing houses (Clearstream) are major instruments of political corruption and economic spoliation of citizens. Estimates of the significance of licit and illicit capital drain to tax havens are rather difficult to assess. It is estimated that in 2000, offshore funds reached over 5000 billion dollars, or 54% of world funds.

Almost all American and European big banks and businesses have opened branches in tax havens. This is the case of BNP Paribas, for example, with a presence in the Bahamas and the Cayman Islands, but also Crédit Agricole, CIC, Crédit Lyonnais, Natexis Banque Populaire, Société Générale, etc. Creating shell companies in tax and judicial havens allows evasion from public powers. A shell company is a fake company hiding the real owner by using nominees. The Falcone family, who became famous after the Angolagate illegal arms trading affair, started a shell company, Brenco France in Paris in 1985, then another, Trading International Limited, based on the Isle of Man, a tax haven - the latter allowing avoidance of both taxes and the law. The advantage of a flag of convenience for a ship owner is in low registration fees and low or zero taxes, weak or non-existent regulation, the freedom to employ crew willing to accept low pay, with little or no social protection (and therefore rarely unionised).

(1) Latest publication: le Pouvoir illégal des élites. Éditions Max Milo, 2014.


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