British Chancellor Rishi Sunak, appointed to the post just over a month ago, announced on Friday March 20 all of the most important British political measures since World War II. The broad package – which includes a Â£ 30billion tax holiday for businesses and a government pledge to pay part of citizens’ salaries for the first time in British history – would have been unthinkable for a Conservative administration there just a few weeks away. The unprecedented nature of the measures, as well as the gravity with which Sunak announced them, made clear the reality of the economic tsunami that the coronavirus pandemic triggered.
The world economy, as a commentator Noted, going to go into cardiac arrest. Central banks from Tokyo to Zurich have reduced interest rates, but it can’t do much to ease the pain of millions of workers who stay at home, assembly lines shutting down, and stock markets falling into free fall.
It is almost impossible to predict the scale of the economic damage as most countries around the world are still struggling to contain the exponential spread of the virus and so much remains uncertain. The virus, for example, disappear thanks to a combination of strict quarantine measures and warmer weather, to come back in force in the fall, causing a devastating double decline in economic activity?
What is almost certain is that Europe is falling into a new financial crisis. “Extraordinary times require extraordinary measures”, admitted ECB Managing Director Christine Lagarde stressed that “there are no limits to our commitment to the euro”. The main economies of the bloc, some of which were flirt with a recession even before the pandemic, are sure to exceed the 3% deficit limits. They are likely to play quickly and freely with EU state aid rules, as hard-hit companies – especially large airlines, including Air France and Lufthansa – may need to be nationalized to prevent them from going bankrupt .
As policymakers try to keep their economies afloat during and after this acute phase of the pandemic, they will need every crumb of income. It is scandalous then that some $ 7 trillion in private wealth is hidden in secret jurisdictions, while corporate tax evasion through offshore tax havens drains up to $ 600 billion a year into government coffers. New search indicated that 40% of the profits of multinational companies are swallowed up abroad.
The Tax Justice Network has identified one âavoidance axisâ – the UK, the Netherlands, Switzerland and Luxembourg – which together account for half of global tax evasion. The UK bears particular responsibility for failing to crack down on the widespread financial embezzlement occurring in its overseas territories. As NHS staff on the front lines of the coronavirus outbreak have Express Fearing they might be treated like ‘cannon fodder’ amid a severe shortage of protective gear, the three most notorious offshore hiding places in the world are the British Overseas Territories.
The most famous are probably the Cayman Islands, which the EU put on its blacklist of tax havens earlier this year. For decades ill-fated businesses from Enron to Lehman Brothers stashed their problematic assets in the idyllic islands, while companies like mining giant Glencore have reportedly channeled bribes through British overseas territory.
The Caymans recently attempted to shake off this reputation as a fiscal Wild West, pledging to reveal business owners by 2023, a move that would bring the island nation into line with EU guidelines. In the meantime, however, stories continue to emerge of how unscrupulous businesses are taking advantage of the Cayman’s lax regulation.
Just a few months ago, the Gulf Investment Corporation (GIC) – a fund jointly owned by the six Gulf countries –request Cayman and US courts to investigate the “hundreds of millions of dollars” that have apparently disappeared from the Port Fund, a Cayman-based financial vehicle.
According to court documents, Port Fund sponsor KGL Investment Company may have been implicated in the misappropriation of proceeds from the sale of Port Fund assets in the Philippines. The GIC says the Port Fund sold a Philippine infrastructure project for around $ 1 billion, but only disclosed proceeds of $ 496 million and paid only $ 305 million to the fund’s investors. .
The âmissingâ $ 700 million didn’t just evaporate into the ether, of course. It seems highly plausible that the gap has gone at least in part to the costly lobbying effort the Port Fund has put in place to get its former leaders, Marsha Lazareva and Saeed Dashti, out of the Kuwait prison, where they were locked up after being sentenced. embezzlement of public funds. Overpowered lobbying countryside racked up a million dollar bill and enlisted everyone from Louis Freeh, the head of the FBI from 1993 to 2001, to Cherie Blair, the wife of former British Prime Minister Tony Blair.
The sordid saga is the perfect illustration of how cunning companies can exploit the lack of regulatory oversight in tax havens like the Caymans to keep money out of public coffers. There are countless examples of this type. Netflix would move money through three different Dutch companies to keep its global tax bill low. Until a few months ago, the tech titan Google took advantage of a tax loophole dubbed the “Double Irish, Dutch sandwich”, funneling huge sums through Ireland to “ghost companies” in tax havens including Bermuda and Jersey, two British dependencies.
European leaders can no longer afford inaction to eradicate these financial black holes. Ibrahim Mayaki, co-chair of a recently created UN panel on illicit financial flows, Noted that âthe money that is hidden in offshore tax havens, laundered by shell companies and outright stolen from public coffers should be used to end poverty, educate every child and build infrastructure that will create jobs and save money. end our dependence on fossil fuels. “
Right now it should be spent on modernizing intensive care beds, ensuring Italian doctors treating coronavirus patients have the gloves that could save their lives and providing support for small businesses European so that they do not make the stomach.