It’s expensive, all this bailing out. Which is why Obama is so keen on grabbing some of that cash back from tax evaders and avoiders (yes, there is a difference, however slight). As the new President amusingly put it:
“There's a building in the Cayman Islands that houses supposedly 12,000 US-based corporations. That's either the biggest building in the world or the biggest tax scam in the world.”
Gordon Brown wants a piece of the action too. HM Revenue & Customs estimates that the size of the tax gap (the difference between what UK companies should be paying and what they are paying) could be anything up to £13bn—a sizeable wedge with so much toxic debt on the state’s banking balance sheet.
Gordo’s crackdown on tax havens is an international effort. It has to be. Attempting to rake back some of the cash that your largest businesses are hiding offshore isn’t going to work if other nations’ aren’t playing the same game. No government, Brown’s included, can risk being seen to damage the competitiveness of its blue chip firms unless there is complete collusion.
And that goes for the targeting of individual savers too. Those citizens hoping to avoid tax in their own country often stash their money in a nearby tax haven. So Dutch savers might open a Swiss bank account, for example. If you target Switzerland, as Brown intends to, those Dutch savers simply move their money to Lichtenstein. You need multinational coordination to have any hope of affecting a proper clampdown.
Obama has already scored a minor victory. The Swiss bank UBS has been forced to reveal the names of around 19,000 wealthy US account holders whom the IRS suspects of tax evasion. According to the Huffington Post:
“Prosecutors suspect that UBS helped its American clients hide $20 billion from the government, or about $300 million a year in taxes, from late 2002 to 2007. UBS has admitted that some of its employees ‘participated in a scheme to defraud the United States.’”
So who’s on the list?