Further speculation on amount of money held in offshore
banks
23 July 2012
A new study for the lobbying group Tax Justice
Network (TJN) claims that wealthy individuals worldwide are holding
between USD21 trillion and USD32 trillion in bank accounts in
low-tax international financial centres.
The research was compiled by James Henry,
formerly chief economist at the management consultancy McKinsey. He
used data published by the Bank of International Settlements,
International Monetary Fund, World Bank, and various national
governments, including their tax authorities, to estimate the
world’s stock of undeclared wealth.
Henry alleges that the ‘missing’ trillions
have been invested ‘virtually tax-free through the world's still
expanding black hole of more than 80 offshore secrecy
jurisdictions’. This ‘offshore economy’ as Henry calls it, is large
enough to have ‘very significant negative impacts on the domestic
tax bases of source countries’.
Some USD9.8 trillion of the total is owned by
92,000 individuals, Henry estimates. This total only includes
deposit and investment accounts, not material assets such as
property and the inevitable yachts and private jets.
According to TJN, the report, called The Price
of Offshore Revisited, demonstrates that the problem of economic
inequality is far worse than previously understood.
‘All studies exploring economic inequality
have systematically underestimated the wealth and income enjoyed by
the world’s wealthiest individuals,’ said TJN’s John Christensen.
According to TJN, the use of discretionary trusts is an important
method of preventing assets being counted in national statistics.
So is the alleged practice of some offshore finance centres of
deeming certain income or assets to be located in other
jurisdictions.
‘A private global infrastructure of lawyers,
accountants, bankers and company and trust formation agents are
dedicated to hiding the assets of the world’s wealthiest
individuals’, says TJN. ‘And they have been spectacularly
successful.’
Sources
Tax Justice Network (Henry report, PDF file)
Tax Justice Network (gloss on report, PDF)
Observer (1)
Observer (2)
BBC
CBS News
Scotsman