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Opinion

Tax havens and global impoverishment

People of the world are uniting to end the tax theft at the heart of global inequality and impoverishment.

Last Modified: 16 Mar 2013 15:05
Hakima Abbas

Hakima Abbas is a political scientist, policy analyst and activist. Her work as a trainer, strategist and researcher, has focused on strengthening and supporting movements for change in Africa and the Middle East.
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A subvertisement campaign was recently launched by a group seeking the end of London as a tax haven [/TheRules]

The world is at a critical juncture where the necessity to rethink our economic modelling, the values of consumption and accumulation have become critical. The planet, not only the people, simply cannot sustain the massive inequality that exists. Despite what we are told and sold, inequality is not inevitable. Global impoverishment will end only when those who gain from the system are held to account and the rules of the system are radically transformed.

While the transformation of the system will require multiple strategies, there has been a renewed focus since the economic crashes in the Global North on the reform of the global financial system. The rules of the system are skewed to the few individuals and corporations that reap benefits from the world's resources and operate with a veil of secrecy to make excessive profits while avoiding tax obligations which would, at the very least, lessen national tax burdens from ordinary citizens and contribute to essential services.

People are mobilising to end these practices. An unusual sight met London commuters this week: a subvertising campaign launched on phone boxes across the city, bringing a distinct message on the causes of global inequality. Bearing a striking graphic of the City of London as an "urban island paradise", at first glance the adverts look like a tourist promotion for the capital, but they are in fact a campaign encouraging Londoners to take a new look at their city: "Visit the City of London - The Tax Haven Capital of the World".

Inside Story
Taking on the tax havens

The campaign, including a day of action on March 16, is spearheaded by /The Rules, Occupy UK, UK Uncut and the City Reform Group, and highlights systemic causes of global impoverishment. Importantly, this comes at a time when the UK Prime Minister David Cameron has explicitly denounced tax evasion after coming under intense public criticism at the revelation of massive tax avoidance of large multinational companies. In June, the UK will host the G8 summit, which Chancellor of the Exchequer George Osborne has said he is "determined to use... to drive a serious debate on tax evasion and tax avoidance".

Paradoxically, the City of London is deeply entrenched in the global network of tax havens that enable US$ 21 trillion to be stashed by the world's wealthy. This is more than ten times the total development aid received by the so-called "developing" world over the past twenty years. The UK government is responsible for enabling this theft by providing a buffer of secrecy and exceptionalism for the City. The City has been granted various special privileges, such as to have its own mayor, its own police force and to enforce a peculiar form of democracy in which corporations assign votes. Various City of London activities and accounts are also not covered by the UK Freedom of Information Act, enabling the companies within its jurisdiction to operate under a shroud of secrecy. Until now, the popular imaginary of a tax haven has been an island paradise or a Swiss resort, yet the City of London is at the centre of a global network of tax havens that offer not only low or zero taxes but specialise in providing facilities to bypass laws and regulations, usually using secrecy or "discretion" as their primary tool.

The Tax Haven Capital of the World campaign is designed to shift the focus away from the "morality" of individual companies to striking at the system that maintains global corruption. The first step is to challenge the UK government to untangle itself from the collusion - not a small feat. Importantly the campaign is driven by UK citizens, for whom tax theft in their own backyard causes a massive tax burden on ordinary citizens with fewer services. In solidarity and recognition of the fact that this theft entrenches global impoverishment, over fifteen thousand people across the majority world have declared their support for the campaign by signing an open letter of support and by placing missed calls using /The Rules' mobile application, /Crowdring (+44 2033 222485).

Explo Nani-Kofi, Director of Kilombo Centre for Citizens' Rights and Conflict Resolution, said:

The City of London enables tax evasion and secrecy globally and is able to do so because of the special treatment it enjoys in the UK. David Cameron and the UK government are in a position to change this. Transforming the rules of the City of London would translate to greater accountability and transparency for everyone including in the majority world.

The predominant trajectory and thrust is for the Global South to fully integrate into the established financial system. Some countries are even looking to the City of London as a model, complete with impunity and lack of transparency. On the flip side, there is renewed effort in some parts of the majority world to contribute to the building of alternatives. In Ecuador [SP], for instance, the people with their government have come together to recreate the economic models of the country and break away from the clutches of the Washington consensus. This model rests on the concepts of Buen Vivir, enshrined in the 2008 Constitution of Ecuador, which demand new approaches to development. Similarly in Africa, civil society is leading the way in demanding renewed valorisation from profit to people.

In the post-2015 discussions much emphasis is being placed on the majority world creating the framework for its own development. What will be critical is that systems, like those of the tax haven network, that enable large-scale theft from the global 99 percent are dismantled. We can no longer talk of development and rights in abstraction from the rules that maintain global inequality and impoverishment. Today, as the people of London take to the streets and call for their government to reform the City of London, it will be a critical step in shifting the global citizen voice towards this focus.

Hakima Abbas is a political scientist, policy analyst and activist. Her work as a trainer, strategist and researcher, has focused on strengthening and supporting movements for change in Africa and the Middle East.

Follow her on Twitter: @HakimaAbbas

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The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.

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