Vatican demands closure of tax havens

3.
Vatican demands closure of tax havens

Pope feels closure of
such offshore banks is the first step out of the current crisis

While international
pressure is mounting on offshore banks to relax secrecy rules, the Vatican, the
seat of the Catholic Church, wants all offshore tax havens to be closed. The
official statement from the Vatican, called an encyclical, is expected to ask
for a closure of such tax havens. The encyclical is scheduled to be released on
March 18 by Pope Benedict XVI.
The Catholic Church periodically issues the encyclical on various issues it is
concerned with. It had planned to come out with an encyclical on tax havens last
year, but postponed the date following a decision to do a thorough research on
global economics and the reasons that have led to the current slowdown.

The paper, in a
scathing attack on “unhealthy and inequitable financial practices,” also pointed
to the alarming figure of global deficit caused by offshore banking. The size of
global deficit is estimated to be around $ 255 billion, almost three times the
aid given to developing countries globally. Closure of these offshore banks,
according to the Pope, should be the first step out of the current global
economic crisis. It is also reliably learnt that the encyclical sees the tax
havens as the main conduit for transferring money from poverty-stricken nations
to the rich world and the consequent impoverishment of the people in developing
and under-developed countries.

The Vatican looks at
the huge amounts siphoned off to these offshore banks as the money that the
governments in developing countries could have utilised for helping the poor.
The Church’s concern on offshore banking also coincides with the global
awareness of fiscal dangers caused by tax havens. Such havens have also featured
in issues raised during the recent US presidential campaign. Democratic
presidential candidate John Edward had said that deposits worth $ 1.5 trillion
were held by US citizens in various offshore banks.

Current US president
Barrack Obama has vowed to check tax evasion by US citizens, estimated to be
around $ 100 billion every year. UK, too, has promised to review ‘offshore
centres’ under its jurisdiction. Unofficial estimates suggest that money stashed
away in these tax havens could be anywhere between $ 11-12 trillion.

According to a recent
report submitted to the Central Board of Direct Taxes, (CBDT) by a former
revenue official, the value of deposits held by Indians in Swiss Banks alone
could be over $ 1 trillion.

(Source : The
Economic Times, 23-2-2009)