News from the Caribbean as of
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Editorial: Caribbean tax havens: An endangered species?
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| Published on Wednesday, October 22, 2008 | Email To Friend Print Version
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The chorus of disapproval directed at offshore financial centres in general, and at least one Caribbean ‘tax haven’ in particular, intensified this week as France and Germany led an offensive on Tuesday to bring tax havens into line with world banking rules at a meeting in Paris organised by the Organisation for Economic Cooperation and Development (OECD).
The world's 40-odd tax havens are perceived to be hideaways for undeclared revenue and hosts to many non-regulated hedge funds that are being partly blamed for the global financial crisis.
Many of the established tax havens are in the Caribbean region, including The Bahamas, the British Virgin Islands and the Cayman Islands. Others, such as Barbados, Nevis, and Trinidad and Tobago have aspirations to join the ranks of offshore financial centres.
However, after US and European governments bailed out a number of banks, politicians have begun questioning why some of those same financial institutions should be allowed to continue to operate in countries that encourage tax evasion.
The French have been particularly outspoken in this respect:
"Is it normal that a bank to which we guarantee loans or allocate our own funds continues operating in tax havens? The answer is no." (French President Nicolas Sarkozy)
"Black holes like offshore centres should no longer exist. Their disappearance must be a prelude to a reform of the international financial system." (French Prime Minister Francois Fillon)
"By mid-2009, we should have established a more realistic [black]list of tax havens and this would be an indispensable step to go further." (French Budget Minister Eric Woerth)
The new blacklist could contain about a dozen countries, said another French official.
The scale of the situation as perceived by the major industrialised nations is illustrated by a report by Transparency International France, which estimates that about 10 trillion dollars -- four times France's gross domestic product -- are stashed in secret offshore accounts away from the prying eyes of regulators or tax inspectors.
On top of this are any number of books and articles claiming that the offshore centres contributed to the financial meltdown by allowing banks such as Bear Stearns to hide their losses.
In particular, two bankrupt Cayman Islands hedge funds established by Bear Stearns are widely reported as having precipitated the subprime credit crisis in the United States, apart from resulting in billions of dollars in losses to their own investors.
Those countries and territories that currently rely heavily on revenue from the offshore financial sector seem to be facing some inevitable economic turmoil and those that were counting on new or additional revenue from such sources to shore up already faltering economies may have to rethink this ambition.
Coming on top of sharply higher costs and declining tourism revenues, this is not good news for many in the region. | | | | Reads : 3073 | | | |
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