by Asinus Asinum Fricat
Wed May 14th, 2008 at 10:37:13 AM EST
After watching Bono making another deeply felt statement last January at Davos, my Irony Meter Alert glowed from orange to red as the gentle bs from the well-meaning rockstar flowed lyrically. I have no problem with him saying that
"we must move beyond mere moral statements if we are to meet our commiments to the world's poorest people"
No, however, as I reported in a previous
diary, Bono would be well served if he were to observe the old adage that
charity begins at home. Having moved his publishing empire to a notorious Netherlands tax haven, he is again berating the Irish government for not giving enough money to NGOs to combat poverty, worldwide. Another irony, of course, is that Davos is situated in
Switzerland, one of the pioneer State in tax avoidance, secrecy and money laundering (to this day,
tax evasion is not considered an offence, but only a misdemeanor.)
For Bono the paradox about being a well known anti-poverty crusader is that his embrace of progressivism does not seem to include a notion of fair and equitable taxation as the decision by his band, U2, to relocate its music-publishing business from Ireland to the Netherlands in order to shelter its songwriting royalties from taxation is harebrained, lending him a whiff of hypocrisy: by reducing his tax payments less funds will reach the NGOs. It's simple logic. U2 has amassed a net worth of 629 million euros -- around $908 million (2006 figure) and since Ireland's taxation of artists is inanely modest (Ireland currently allows unlimited tax-free earnings for artists from the sale of their work, but not from licensing or merchandising deals) it does not make much sense for Bono to expose himself to criticism for the sake of saving a few euros (yes, I know, accountants will point out the obvious ie he has the right to minimise his taxes like everyone else).
Oh, a storm is threat'ning
My very life today
If I don't get some shelter
Oh yeah, I'm gonna fade away (Gimme Shelter, Rolling Stones)
The members of U2 are not the only celebrities sheltering in the land of tulips, windmills and Van Gogh. Mick Jagger and the Rolling Stones were the avant-garde on the art of Avoision, my own conflation of the words Avoidance and Evasion. Many of the world's multinational corporations, like Coca-Cola, Nike, Ikea and Gucci, have set up holding companies in the Netherlands in recent years to take advantage of tax shelters nearly identical to the ones that the Rolling Stones and U2 use.
"In this world nothing is certain but death and taxes," Benjamin Franklin famously proclaimed. But for the well-heeled and well-advised, only the grim reaper is a sure certainty. It's practically de rigueur for the wealthy to park a large proportion of their assets in tax shelters disseminated around the globe. The private bankers of the rich can always find ways to structure transactions that greatly reduce their tax bills and sometimes eliminate them altogether. Google tax havens and in 0.16 second you will have 415,000 links. Places you never knew existed suddenly crop up, offering a panoply of services ranging from nil tax havens to foreign source exempt. Dubai, Monaco, Bermuda are among the relatively known havens and such exotic names like St Kitts & Nevis, Labuan may draw a blank but rest assured, they too provide sophisticated tax reliefs as well as first class hotels, white sandy beaches and rich sea-food. But the harm these activities cause are orders of magnitudes greater than any claimed benefits, IMHO.
According to research published by the Tax Justice Network, on 31 March 2005,
wealth
held in tax havens is costing governments around the world up to US$255 billion annually in lost tax revenues.
That sum, if collected, would eradicate many ills and serve notice to entrenched poverty. But as usual, Political Will resides in absentia, another convenient shelter.
This following estimated value of assets held offshore can be considered as conservative since it does not include corporate profits hidden in tax havens, monies that are in transit ie being laundered, monies from crime, drug trade etc...US $11.5 trillion to a staggering 15 trillion! (this figure is based solely on the offshore holdings of people falling into the "high net-worth individual" category (HNWIs). This category only includes people with liquid financial assets exceeding US $1 million. The assets of smaller net-worth individuals are not included in the wealth estimate, though it is probable that the sums held offshore by people falling into this category are considerable)
In any case, the biggest culprits are the big financial centres such as in Britain, the United States and Switzerland. That is not to say that no little efforts were made to redress this imbalance: JITSIC was established in 2004 by the tax administrations of Australia, Canada, the United Kingdom and the United States, to supplement the ongoing work of the Australian Taxation Office, the Canada Revenue Agency, HM Revenue & Customs, and the Internal Revenue Service in identifying and curbing tax avoidance and shelters and those who promote them and invest in them. Additionally, private individuals have formed the tax justice net, specifically to highlight the causes and effects of untaxed monies that have gone AWOL. Will the next President of the United States ignore this fiscal inequality? Or will he make a serious stand and combat poverty?
