Daniel Finn
London Review of Books

There was an awfully genteel protest organised by the Tax Justice Network in Jersey earlier this year. The TJN had joined up with a group of Jersey campaigners who would like the island to wean itself off its dependence on the more creative aspects of modern finance. Christian Aid have estimated that Southern countries lose at least $160 billion every year in unpaid taxes as a result of dodgy accounting by corporations operating on their territory. According to the OECD, there is $5 trillion (or more) parked in offshore tax havens, beyond the reach of impertinent governments and their demanding citizen bodies.

How to get at it? The business of tax avoidance, like the trade in derivatives, is ferociously complicated, and intentionally so: the fewer the people who understand what is going on, the easier it is to play the financial equivalent of a three-card trick and whisk your money off to a safe location. Tax dodgers have quite a sense of humour – or so it seems to me. Take transfer mispricing. One of the commonest forms of tax evasion, it accounts for much of the $160 billion. I could explain that this particular stunt involves transnational corporations exaggerating costs and minimising profits when they file their tax returns. I could mention surveys which estimate that more than 60 per cent of international trade takes place within TNCs, allowing companies to make up prices that suit their purposes. But the story wouldn’t be complete without mentioning the firm that officially paid $972.98 for each plastic bucket it imported, or the toilet gloves which were priced at $4,121.81 per kilo.

Continue reading at lrb.co.uk…

This entry was posted on Thursday, July 2nd, 2009 at 11:43 am and is filed under Issues in the News, Media, News.