More than $12 trillion has been siphoned out of Russia, China and other emerging economies due to offshore finance, new research reveals.
More than $12 trillion has been siphoned out of emerging economies such as China and Russia due to offshore finance, according to new research for the Tax Justice Network by Columbia University Professor James S. Henry.
"We're seeing an enormous amount of capital flight out of places like China in the last 18 months, more than a trillion moving out," Professor Henry told the Guardian.
Henry, a former chief economist at consultancy McKinsey, carried out an extensive 18-month research project revealing a sharp increase in the capital flowing offshore from developing countries.
The new report estimated that Chinese citizens have $1.2 trillion stashed away in tax havens. Meanwhile, by the end of 2014, around $1.3 trillion of assets from Russia were sitting offshore accounts.
"It's really up to OECD countries like Australia, the United States, Canada, the UK, the EU and of course Switzerland is a big recipient of a lot of this money, so it's really the rich countries of the world that have an opportunity to take charge of this."
The new report comes ahead of the UK Government’s summit on offshore corruption in London on Thursday, where leaders will meet to to discuss efforts to combat tax havens.
On Monday, more than 300 leading economists from 30 countries issued a letter to world leaders warning that there is no economic justification for allowing tax havens to continue, and urging them to bring an end to offshore financial secrecy.
“The current system allows the rich and powerful to hide money offshore, robbing countries of much needed tax revenue for essential services like healthcare and education,” Oxfam International, which co-ordinated the letter, said in a press release.
In efforts to stem the global tax evasion crisis, the economists are calling for governments to agree new global standards requiring companies to publicly report taxable activities in every country they operate, and to ensure all territories publicly disclose information about the real owners of companies and trusts.
Signatories include Thomas Piketty, author of best-selling ‘Capital in the Twenty-First Century’; Angus Deaton, the current Nobel Prize-winner for Economics and Nora Lustig, professor of Latin American Economics at Tulane University.
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