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16 Jan, 2014 15:38

‘Shocking abuse of public trust’: Columbia University prof estimates $20tln hidden in tax havens

‘Shocking abuse of public trust’: Columbia University prof estimates $20tln hidden in tax havens

World billionaires and mega rich companies stash trillions in so-called “treasure islands” special tax zones like the British Virgin Islands and the Cayman Islands, Jeffrey Sachs, head of Columbia University’s Earth Institute told RT at the Gaidar Forum.

“It’s estimated that there are maybe $20 trillion of assets put in these tax havens around the world,” Sachs told RT on the sidelines of the fifth annual economic forum in Moscow.

“And who creates this? Not these little islands, but the US government by approving these arrangements, the UK government because after all these are British territories,” Sachs told RT.

An estimate by Boston Consulting Group pegs offshore wealth at $8.5 trillion. The British Virgin Islands, the Cayman Islands, and Bermuda are among the key destinations for “offshore wealth” - money that is kept abroad for tax purposes.

“It’s an abuse of the public trust,” according to Sachs. “I believe, these abuses need to stop. And it’s not just about the exchange of information – that’s not enough,” Sachs told RT.

It's about “stopping the abuse itself by letting very-very rich people from the US or Europe or mega companies like Apple or Google take their profits, and instead of paying the taxes that they should pay as decent citizens, put them tax free into these tax havens with the approval of the politicians of course, who use this to pay campaign contributions,” said Sachs.

Reuters / Gary Hershorn

Tax evasion continues to be a hot topic at G8 and G20 forums, as governments worldwide are looking to collect more taxes to fill budget gaps.

“I think the world is waking up to the scandal of the international tax situation,” said Sachs.

The US has gone after companies like Facebook and Apple, which doesn’t keep company money on a tropical island, but in Ireland, which offers a corporate tax rate of 12.5 percent, instead of Uncle Sam’s 30 percent.

Apple isn’t alone. American Express, Dell, Microsoft, Nike, and other Fortune five hundred companies bear evidence of tax haven profits in their financial reports. Billions of dollars are saved by keeping money from the US tax system.

The Gaidar Forum, one of Russia’s top economic and political conference of the year, runs January 15-18, 2014. It is named for the late Egor Gaidar, a former Russian prime minister known for his “shock therapy” liberal economic policies during the transition to a market economy in the early 1990s.

The forum drew economic analysts from across the globe. Sachs is a professor at Columbia's School of International and Public Affairs in New York City and is a special adviser to the United Nations.

Billionaire Club

Though 2013 - a year marked by extreme austerity, unemployment, and hardship - billionaires and companies with offshore accounts continued to profit.

In the last year alone, billionaires, some of whom store their wealth in the cited tax havens, were able to add $226 billion to their personal wealth, according to The Wealth X and UBS Billionaire Census 2013.

The combined fortune of the world's billionaires now stands at $6.5 trillion, up from $3.1 trillion in 2009, according to the Billionaire Census.