Financial transparency poor in Switzerland, Hong Kong, U.S., study says
TORONTO, Nov 2 (Thomson Reuters Foundation) – Switzerland, Hong Kong and the United States have the world’s worst records on combating financial secrecy that allows the wealthy to dodge taxes or hide their money, according to a study released on Monday.
Most countries’ secrecy score improved in recent years as governments responded to public anger over inequality and tax evasion, but the records in the United States and Germany worsened, said the Tax Justice Network’s bi-annual financial secrecy index.
Ranked the eighth-worst offender globally, Germany is a “growing menace for financial transparency,” the TJN said.
The United States is performing worse than the Cayman Islands, Luxembourg or United Arab Emirates, which are also among the 10 poorest performers, it said.
As much as $32 trillion dollars of private wealth is hidden away in tax havens, untaxed or barely taxed, the TJN said.
And illicit financial flows across borders are estimated at more than $1 trillion annually, it said.
Africa alone has lost more than $1 trillion dollars to capital flight since 1970 as wealthy elites move money overseas, it said.
Countries fail to promote financial transparency by refusing to share information about shell companies or blocking exchanges of data on multinational firms shifting profits among various locations to shop around for the lowest tax rates, it said.
In an attempt to crack down on tax evasion, the European Union is starting to require that multinational firms provide financial data broken down by country as well as central registers of the beneficial owners of shell companies.
The administration of U.S. President Barack Obama has pressured countries such as Switzerland to provide information on Americans attempting to dodge taxes, but the performance of the world’s largest economy has slipped when it comes to enforcement at home, the TJN said.
“The USA must finally overcome its historically rooted opposition to reasonable tax sharing with its trade and investment partners,” said John Christensen, the U.K.-based group’s executive director, in a statement.
The U.S. states of Delaware, Wyoming and Nevada fared particularly poorly in terms of transparency, as they serve as hubs for offshore investors to set up shell companies to hide assets, it said.
