Few programs run by the Australian Taxation Office have received the kind of attention enjoyed by the ATO’s crackdown on the use of offshore tax havens, which runs under the codename of Project Wickenby. And why not — as the ATO proudly trumpets in a special report in its 2012-13 compliance program released last week, Wickenby is “achieving substantial results”.
There have been several high-profile scalps, including music impresario Glenn Wheatley, and a string of smaller victories — since the project started in 2006, there have been 26 convictions for indictable offences, 69 people convicted of summary offences and even one extradition. There’s been a steady decline in the money flowing to tax havens such as Vanuatu (fund flows have fallen 50% since 2007-08) Liechtenstein (down 79%), Jersey (down 35%) and Switzerland (down 30%).
And most of all, there’s been cash. Wickenby has identified $1.3 billion in liabilities, with more than $600 million in collections.
Little wonder then that the government handed the ATO and the other members of the Wickenby taskforce $76.8 million over the next three years to continue with the tax haven crackdown. There’s tax gold in them there tax havens, and the government wants the ATO to chase it down.
Just how much gold was highlighted overnight by a report into tax havens by a group called the Tax Justice Network, which campaigns against tax havens and inequality. The report, written by former McKinsey consultant and tax haven expert James Henry, claims the world’s super rich hold around $21-32 trillion of cash in a network of 80 offshore tax havens where they can be guaranteed secrecy.
Henry argues further that around $10 trillion is held not by millions of people but by just 92,000, an elite group “protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy”.
The Tax Justice Network argues that if the “debtor” countries whose citizens hold money offshore could bring some of this money back — and tax it, of course — then issues such as poverty and climate change could be addressed far more thoroughly.
Several experts have been quick to raise questions about Henry’s $21 trillion estimate, which has basically doubled in the past two years. But even if the target is really $10 trillion, or even $1 trillion, you can understand why the tax officials — backed by governments who know you never lose a vote going after rich tax dodgers — are desperate to keep up the pressure on tax havens.
Could the ATO still claim a really big Australian scalp? Not a small-time music manager, but a prominent, super wealthy rich list member?
We’ll have to wait and see — despite the wins of Project Wickenby, the secrecy of the world’s tax havens is still a major barrier.
In the meantime, all eyes will be on the upcoming trial of BRW Rich 200 member Peter Bartlett, who along with business partner Ron Sayers faces tax evasion charges. Both men have pleaded not guilty. A trial is likely to start in February 2013.
*This article was first published at SmartCompany
The tax system will be fair when the ordinary punter has the ability to have his wage paid via a Caymans Island entity.
A recent story in the Guardian put the figure at USD 21 trillion.
The money stolen by people in 3rd world countries and placed in 1st world banks is the greatest problem. The effect of this money being taken out by corrupt governments means that there is a slowing of development instead of raising living standards for the most needy. Australia gives billions in aid to countries like Indonesia, but if their government stopped the out flow of black money the need for aid would end. All we are doing is propping up corruption. If our aid was directed at exposing corrupt money flight, far more benefit for the poor would result.
While some of us including me suspect our Governments and Banks are supporting an international Ponzi Scheme. I do agree with Oscar Jones as he writes, tax will be fair when the “ordinary punter” perhaps the owner of MONA . Who has put something in place which lifts every person in the State of Tasmainia is left alone to conduct his activity within the law as it is proscribed. Edward James 0243419140
$21,000,000,000,000 is a huge number. It’s is approximately a quarter of the global annual GNP. Numerically, it is approximately equal to the distance to Alpha Centauri (nearest star other than the sun) in expressed as miles. 21 trillion seconds is about 660,000 years. 21 trillion dollars would go a long way to fix many of the problems that beset the world. Governments really should be working towards some sort of international approach to crack down on tax havens, using carrots where appropriate and sticks where necessary (e.g. banking sanctions, withholding taxes on transfers in and out, etc). Of course it won’t happen – there would be too many wealthy and powerful interests opposed, with the bevy’s of lawyers and accountants looking for new ways around whatever structures might be put in place.