Tax havens: Super-rich 'hiding' at least $21tn

 
Sterling pound notes James Henry says his $21tn figure is a conservative estimate

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A global super-rich elite had at least $21 trillion (£13tn) hidden in secret tax havens by the end of 2010, according to a major study.

The figure is equivalent to the size of the US and Japanese economies combined.

The Price of Offshore Revisited was written by James Henry, a former chief economist at the consultancy McKinsey, for the Tax Justice Network.

Tax expert and UK government adviser John Whiting said he was sceptical that the amount hidden was so large.

Mr Whiting, tax policy director at the Chartered Institute of Taxation, said: "There clearly are some significant amounts hidden away, but if it really is that size what is being done with it all?"

Mr Henry said his $21tn is actually a conservative figure and the true scale could be $32tn. A trillion is 1,000 billion.

Mr Henry used data from the Bank of International Settlements, International Monetary Fund, World Bank, and national governments.

His study deals only with financial wealth deposited in bank and investment accounts, and not other assets such as property and yachts.

The report comes amid growing public and political concern about tax avoidance and evasion. Some authorities, including in Germany, have even paid for information on alleged tax evaders stolen from banks.

The group that commissioned the report, Tax Justice Network, campaigns against tax havens.

Mr Henry said that the super-rich move money around the globe through an "industrious bevy of professional enablers in private banking, legal, accounting and investment industries.

"The lost tax revenues implied by our estimates is huge. It is large enough to make a significant difference to the finances of many countries.

"From another angle, this study is really good news. The world has just located a huge pile of financial wealth that might be called upon to contribute to the solution of our most pressing global problems," he said.

'Huge black hole'

James Henry says his $21tn figure is a conservative estimate

The report highlights the impact on the balance sheets of 139 developing countries of money held in tax havens that is put beyond the reach of local tax authorities.

Mr Henry estimates that since the 1970s, the richest citizens of these 139 countries had amassed $7.3tn to $9.3tn of "unrecorded offshore wealth" by 2010.

Private wealth held offshore represents "a huge black hole in the world economy," Mr Henry said.

Mr Whiting, though, urged caution. "I cannot disprove the figures at all, but they do seem staggering. If the suggestion is that such amounts are actively hidden and never accessed, that seems odd - not least in terms of what the tax authorities are doing. In fact, the US, UK and German authorities are doing a lot."

He also pointed out that if tax havens were stuffed with such sizeable amounts, "you would expect the havens to be more conspicuously wealthy than they are".

Other findings in Mr Henry's report include:

  • At the end of 2010, the 50 leading private banks alone collectively managed more than $12.1tn in cross-border invested assets for private clients
  • The three private banks handling the most assets offshore are UBS, Credit Suisse and Goldman Sachs
  • Less than 100,000 people worldwide own about $9.8tn of the wealth held offshore.

Mr Henry told the BBC that it was difficult to detail hidden assets in some individual countries, including the UK, because of restrictions on getting access to data.

A spokesman for the Treasury said great strides were being made in cracking down on people hiding assets.

He said that in 2011-12 HM Revenue & Customs' High Net Worth Unit secured £200m in additional tax through its compliance work with the very wealthy.

He said that agreements reached with Liechtenstein and Switzerland will bring in £3bn and between £4bn and £7bn respectively.

 

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  • rate this
    +7

    Comment number 250.

    Is this the same 'hot money' that tried to make a return on the little people's mortgage debt? Or pump and dump IPOs? Is it the same hot money that's now being invested in foodstuffs. That's the next stage, speculation on the cost of your dinner. Food prices will have to rise in order to provide a healthy return to investors, and an extremely unhealthy return to the rest of us.

  • rate this
    +4

    Comment number 249.

    The falsehood that the rich must be rich to help the poor MUST be exterminated. Trckledown economics is a FRAUD

    We MUST set an example

    If you want to be a British Subject or live or pass through or have any business connection in the UK you must not earn globally more than the National Maximum Income (20 x Nat. Min wage).

    You wealth must be less than £ 2 Million!

    Don't play don't' come here!

  • rate this
    +10

    Comment number 248.

    Hi proles me Dave and George are currently having a great time on our 3 month holidays at the moment were on a billionaire russian oil barons yacht of the coast of some private Greek island its fab he pays no tax yet lives in safety in the uk anyways tax avoidance is quite above board .Jeremy Hunt pp Lord ashcroft

  • rate this
    +2

    Comment number 247.

    #228
    Well, Hartnett seemed to have a penchant for extremely expensive lunches - Mr Creosote would have approved.
    The Board Members who are very of Guernsey appear to be confused about their roles.
    The new boss was in charge of the Border Agency.
    Looks like the govt is wilfully planning to fail - now why would it do that?

  • rate this
    +9

    Comment number 246.

    What's the point of a government ?

    Seriously.

  • rate this
    +15

    Comment number 245.

    However morally wrong it might appear, what gives the 'poor' a legitimate claim to any of this money

    -Well as a large proportion of it is creamed off from countries with high levels of poverty but which are mineral rich by their own tax evading ruling classes and multinational corporations despite the fact that it is the poor who do the work I would have thought the answer is blindingly obvious

  • rate this
    +15

    Comment number 244.

    These are the same people who gamble on comodity prices to gain even more wealth. The result has been artificial increases in the cost of food and many thousands, perhaps millions, of people dying worldwide.

  • rate this
    +5

    Comment number 243.

    If these conspiracy theorists were right about the elite/bilderbergers, what else are they right about? False flag attacks on olympics so elites can pursue ther aims further. Won't matter about all this scandal if they kick off a world conflict. Why do BBC not report on bilderberger meetings? Very worrying that Israel say they're worried over Olympic attack, just after g4s debacle. Like a script.

  • rate this
    +4

    Comment number 242.

    Frankly an obscene amount of wealth held by a fairly small group of people worldwide. These assets should be taxed appropriately and used to eliminate the deficits in countries around the world. This would stop the austerity measures that governments round the world say are essential. The amount of un-taxed wealth discovered blows that argument completely out of the water!

  • rate this
    +6

    Comment number 241.

    Healthy nations depend on working communities and a large middle class. It doesn't matter HOW the wealthy obtained their wealth, wealth division is a cancer of our planet (increasing crime, the working poor, and reducing the power of democracy). It stops, or we stop it.

  • rate this
    +24

    Comment number 240.

    What can we do about it ?
    Blame the unemployed and disabled, single mothers and immigrants, children, teenagers, homosexuals, pick who to hate and who to blame, if you can not make up your own mind read the Daily Mail !

  • rate this
    +17

    Comment number 239.

    When you are rich you can employ people to expolite the tax laws for your own ends, if like me you have little money you have to pay the amount they ask for. The current government talks about everyone in this and we all have to pay our fair share of tax, but they do nothing to stop these spolit rich kids, why because they are they are in this group

  • rate this
    +279

    Comment number 238.

    This has been common knowledge for years. There would be no economic crisis if the rich paid tax. No need to cut benefits for the poor. When will a government spend more on finding the hidden money rather than chasing the few benefit scroungers, for what in comparison is not even quarter a peanut.

  • rate this
    +39

    Comment number 237.

    If the spooks of the U.K. and U.S.A. could use their cyber technology to hack into the offshore accounts and transfer them to the national treasuries, could the (once) mega rich make a complaint without providing evidence of their tax evasion?

  • rate this
    +28

    Comment number 236.

    @227 Daniel

    Agreed at this juncture in time.

    However when the lights go out as you can't pay the electric bill and you can't order a takeaway pizza as you can't afford food, then, with no distractions except basic instincts to just survive, there'll be plenty of appetite for change.

    Watch Spain closely in the next fortnight...

  • rate this
    +20

    Comment number 235.

    So that's where the recession came from. If this money was circulating in our economies maybe we might not be in a big a hole as we think we are in. Lets take the power from the rich and the media and let our governments do the right thing for once.

  • rate this
    -6

    Comment number 234.

    @220. Norman Bailey

    "The rich are a dishonest class of people who want nothing but money. I have little or no trust in them"

    Bit of a generalisation - what about rich people who have worked hard to achieve what they have? You don't trust successful people? That doesn't make any sense!

    Lots of poor people want nothing but money, - so you don't really trust anybody?

  • rate this
    0

    Comment number 233.

    If a substantial amount of this is 'managed' or 'invested' funds, then it is not lost from the world economy as it is lent and invested - such as buying government bonds that in turn helps the government to keep our hospitals and schools going. It is only the cases of funds which have been misappropriated, or on which relevant taxes have not been paid that should be of concern.

  • rate this
    +1

    Comment number 232.

    This has been going on for years, and will go on for years to come.

    Don't know why anyone is getting upset about this story: it has been reported before, and it will be reported again.

    Most governments collude in this accumulation of wealth by the few, and many political parties benefit from it.

    This situation will never change, sadly, so move along, keep working and keep paying your taxes!

  • rate this
    +4

    Comment number 231.

    I don’t think that the issue is or should be how much money someone has, the issue should be if that person has avoided/evaded paying tax on it when they earned it.

    The problem is that politicians of all parties are loath to reform the tax system to make sure that there are not loopholes that allow the rich to avoid paying tax like ordinary people.

 

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