Tax havens used to hoard gigantic sums of wealth for elite

Research by Oxfam shows that globally the 0.1% have hidden more untaxed wealth offshore than the amount owned by half of humanity.

Offshore tax havens

The super rich 0.1% have £2.68trn hidden in accounts registered abroad, while the 0.01% hold half of that amount.

For context, the amount is almost the size of the entire UK economy and is more than twice the GDP of the 44 least developed countries.

Christian Hallum, Oxfam’s Tax Lead, said:

This isn’t just about clever accounting — it’s about power and impunity. When millionaires and billionaires stash trillions of dollars in offshore tax havens, they place themselves above the obligations that bind the rest of society. The consequences are as predictable as they are devastating: we see our public hospitals and schools starved of funds, our social fabric shredded by rising inequality, and ordinary people forced to shoulder the costs of a system rigged to enrich a tiny few.

One issue with this approach is that taxes do not fund public spending. The government has a flat currency that it can create and invest. Where taxes are important is to control any inflation through making the currency more scarce. This is an important distinction because it reverses the way fiscal policy is organised. Taxes are for if and when there’s too much inflation, they don’t come before spending.

What’s frustrating is that right-wing governments are willfully inept at ensuring efficiency in public spending. From infrastructure projects to outsourcing, the public purse is seen as a vehicle for wealth extraction. In its first report, think tank Verdant, headed by a former adviser to Labour shadow chancellor John McDonnell and a civil society campaigner, found at least £30.9bn in annual efficiency savings without any nationalisations. The fact that public finances are, at times, treated as a joke doesn’t mean the super rich should hide their wealth offshore, though.

Oxfam notes there has been progress on tax havens, but the amount hidden remains high at around 3.2% of the entire globe’s GDP.

Solutions

To tackle the issue of high economic disparity, the charity recommends introducing a wealth tax of 2% on assets worth £10 million or more.

Another solution is for countries to initiate a UN Tax Convention to end tax havens entirely.

Featured image via the Canary