There's no reason why you would have noticed a few recent news items about tax havens, but that's one of the many reasons the Sovereign Society exists -- to keep you abreast of offshore developments and to explain how events may affect you, your wealth and your freedoms.
One interesting item has Gibraltar's chief minister, Peter Caruana, predicting that tax havens will cease to exist within 10 years because of what he calls "international scrutiny and pressures." Of course the Rock is both a semi-independent British overseas territory subject to control by London, and also a certified tax haven. Gibraltar was once listed by the busybody, left-leaning Organization for Economic and Community Development (OECD) as a harmful tax haven, but it has since reformed its laws to become more "transparent," a favorite word the anti-tax haven crowd uses to mean tax information exchange about individuals among governments, i.e an end to any financial privacy.
Of course Mr. Caruana sang praise for his own jurisdiction, but he might just as well have praised almost the entire offshore financial community, tax havens all. In the last decade almost every offshore jurisdiction haas adopted stringent new anti-money laundering and "know your customer" laws, as well as imposed obligations to report suspicious financial activity. These laws aim especially at drug and terrorism money and most of them are far tougher in fact and in enforcement than those in the major centers of dirty money -- the United States and the United Kingdom.
The real source behind all the pressure and manufactured media hullabaloo against tax havens has been the tax collectors of major welfare state nations, a miserly group that is convinced that everyone and anyone who does business offshore is automatically a tax evader.
The IRS and British Inland Revenue hate the fact that tax havens offer tax free profits and statutory guarantees of bank and financial secrecy. They refuse to accept the fact that tax competition among nations is good for the world economy because it keeps taxes lower, increases profits and that creates jobs.
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Proof of a sort that tax havens have improved comes from none other than the notorious OECD group, the Financial Action Task Force (FATF), the self-appointed blacklisters of all tax havens, from Switzerland to the Cayman Islands. Last week FATF announced that the Marshall Islands has been removed from the OECD's list of so-called "harmful tax havens" after this tiny Pacific island jurisdiction committed to improving transparency and establishing exchange of tax information.
Interestingly, the only "uncooperative" tax havens still on the FATF hit list are Andorra, Liechtenstein and Monaco - all sovereign nations with strict financial secrecy laws that they refuse to waive in the fact of FATF bullying. And God bless them!
Taxes & Hypocrisy
What must be understood is that the anti-tax haven campaign, now a decade old, is really all about tax collectors using phony reasons (anti-drug, anti-money laundering, anti-terrorism) as public relations covers for curbing the right of individuals to bank, invest and do business anywhere in the world they wish. These phony political attacks patently run counter to all modern economic trends of globalism, expanded world trade, international investment and free exchange of funds among nations.
And for some of the major protagonists, such as the U.S. and the U.K., it is sheer hypocrisy, since those two nations are major tax havens for foreigners who invest there. For example, wealthy "non-domiciled" residents of London pay virtually no taxes on income earned elsewhere, and even those who are paid in the U.K. have a special tax break that greatly reduces their taxes compared to U.K. citizens.
But bashing tax havens has become an international sport amongst leftist politicians who have always preached "soak the rich" themes in trying to appeal to the poor, hard working masses -- it's called demagoguery. Not to be outdone, the Democrats who now control the U.S. Congress are already passing new restrictions and levying new taxes on offshore financial activity, and I'll have more to say about that stupidity shortly. (President Bush, get out your courage and your veto pen!)
Who Eggs Benedict?
Not to be outdone, it is reported that Pope Benedict XVI is working on an an encyclical that strongly condemns the use of tax havens and offshore bank accounts by wealthy individuals. The Times of London reports that the Pope will argue that tax avoidance and evasion is morally unjust since it supposedly prevents governments from collecting revenues to help society's least fortunate people. ("Render unto Caesar the things that are Caesar's...") That puts use of tax havens right up there along with the mortal sins of abortion, homosexual conduct and birth control. This is one Catholic who wishes the Pope had better economic advisors so that he might understand the beneficial role tax havens play in the world economy. (According to the Council of Vienne [1311], a person who charged interest on a loan was to be punished as a heretic was committing a mortal sin).
Notwithstanding the continuing leftist onslaught against tax havens, I predict they will survive and prosper, just as they have been doing since this battle began ten years or more ago.
And if you want to know how tax havens can help you morally to expand your wealth and religiously protect your assets, CLICK here for the new revision of my classic book, Where To Stash Your Cash: Tax havens of the World.
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