Tax havens aren't quite the problem many seem to think


Yet another report from Oxfam shouting about the iniquities of inequality, the way in which tax havens rob governments of their rightful dues and....well, you get the story, you've heard it screamed at you often enough. But the real point to pick up from this is how unimportant that issue of tax havens actually is:

In a report titled End the Era of Tax Havens, Oxfam said wealthy people funnelling cash to “secrecy jurisdictions” such as the Cayman Islands and Bermuda were contributing to the wealth divide.

It said the Treasury was losing around £5bn a year from British “tax-dodgers” holding more than £170bn in tax havens.

It also highlighted the impact on the global wealth gap, saying governments are thought to be losing £120bn, with the world’s poorest regions missing out on £43bn.

£120 billion certainly sounds like a lot of money. But is it actually? In comparison to what?

The global economy is around $70 trillion, global tax revenues are some $23 trillion. Being generous with exchange rates we might say that the tax dodging (not that we accept the sum itself but let's work with what we're being given) is 1% of government budgets. So, who thinks that the world would be just peachy if governments had another 1% of revenue? How many problems does anyone really think this will solve? No, serious question.

Then think about the effort being being applied here. If 1% really is an important number then why not apply that same effort, or possibly less as it might actually be easier, in making governments just that 1% more efficient at what they do? We would have that same lovely outcome of making the world a better place but we'd have expended a great less energy in getting there. Odd then that the people shouting most about the havens aren't the people shouting about the efficiency with which the money is used really.

Leave aside all of the other arguments about tax and havens. Is 1% actually an important number?