The arguments

Every one of the major arguments put up in defence of tax havens, bar one, are wrong. To understand these arguments, you must first understand what tax havens are: they are not just small, palm-fringed islands, and they are not just about tax.

Part one: bullsh*t detection

At the lazier end of the spectrum we have…

We are not a tax haven!

Means: We are a tax haven, but don’t tell anyone.

We offer agile and flexible / light-touch regulation

Means: We offer lax / complacent regulation

We respect privacy

Means: We will turn a blind eye to your dirty money


Means: Friendly for us, but probably not for you

This should be regulated elsewhere = This will be regulated nowhere

We maximise our tax efficiency

Means: We avoid tax (the “Bono defence”)

No tax was due, so no tax was avoided

Means: We dodged the tax, so that no tax was due (the “Philip Green” defence)

We manicured our taxes

Means: We evaded our taxes (The “Yukos defence”)


Means: When companies use questionable third party endorsements to counter allegations of tax avoidance.

We use innovative tax planning

Means: You paid your taxes? Sucker!

Part two: more detail

For the more advanced opponent:

1. Freedom, free markets

Tax havens are outposts of freedom

We say: Freedom is double-edged. As the economist John Maynard Keynes and many others have explained, and as the latest crisis shows, freedom for elites and for financial interests in particular can mean bondage for ordinary citizens. Tax havens provide the freedom of the fox in the henhouse.

In fact, many tax havens, particularly small ones where it’s easiest for financial interests to capture political institutions and even the media, can be rather repressive places, highly intolerant of criticism.

Tax havens are pro-free markets and pro-business

We say: tax havens corrupt and distort global markets. They give advantages to multinationals over their smaller, more locally-based competitors, which have nothing to do with the quality or price of their goods and services. They provide secrecy, which goes directly against the proper functioning of markets.

2. Secrecy

Financial secrecy is necessary to protect people’s privacy

We say: Legitimate confidentiality is one thing. Just as a doctor won’t nail details of your hemorrhoids to his surgery door, bankers rightly keep your personal information private.

But offshore secrecy is another thing altogether. Tax and criminal authorities or financial regulators have legitimate reasons for obtaining information about their citizens’ or corporations’ financial affairs, even when their affairs are overseas. The alternative is tax evasion and other criminal activity, where already rich elites take the cream of globalisation and push the costs and risks onto the shoulders of everyone else. International co-operation and transparency are key. Tax havens actively work to thwart this.

Swiss bank secrecy laws were enacted in the 1930s to protect Jewish money from the Nazis

We say: No it wasn’t. Swiss banks made that story up. A French tax evasion scandal, involving two bishops, a dozen generals, three elected members of the French Senate, leading industrialists and a prominent newspaper owner, was the key trigger for those laws (and Swiss banks collaborated closely with the Nazis before, during and even after the war.) Chapter 3 of the UK edition of Treasure Islands carries the full story.

Bank secrecy is dead. The G20 and OECD have ushered in a new era of transparency

We say: False. A lot of journalists bought into the claim made by G20 leaders in April 2009 that “the era of banking secrecy is over.” But despite some modest steps such as a very limited penetration of Swiss bank secrecy by a few countries, for example, the OECD (a club of rich countries that the G20 tasked with implementing this) has delivered very little in practice. The offshore secrecy system is alive and still thriving.

Our tax haven is well-regulated, co-operative and transparent

We say: They always say this. Some havens are cleaner than others, to be sure, but all fall woefully short of acceptable behaviour.

As a rule, the people in tax havens won’t steal your money (if they did, nobody would use them). In this sense, many of them are (reasonably) well regulated.

What they will do, however, is help you steal other people’s money, whether through tax evasion or avoidance, sophisticated insider trading, complex financial dealings, or whatever. Tax havens promote the interests of insiders, at the expense of wider society. This is the core business model, with secrecy as a prime offering.

Some havens put wonderful laws and regulations on their books, getting high marks from bodies like the OECD or the IMF – then they use devious tricks and obstacles to make sure these laws can’t usually be applied. Or don’t take the necessary steps to require compliance. The recent experience of tax information exchange processes illustrates this cynicism. Since 2009 tax havens have rushed to sign up to OECD model tax information exchange agreements with other countries knowing full well that the OECD’s model agreement is burdensome and difficult to operate. Meantime, major OECD countries like Austria and Switzerland continue to block efforts to adopt the far more effective process for exchanging information automatically.

Sometimes, havens will co-operate grudgingly with powerful countries like the United States, allowing some limited transparency – but they will refuse to co-operate with poorer countries.

3. Tax

Tax avoidance is legal, so it’s OK

We say: No it isn’t OK. Tax avoidance, by definition, involves getting around the spirit of the law. It is profoundly anti-democratic. It enables corporations that avoid tax to free-ride on the rest of us: taking the benefits from healthy and educated workforces, publicly guaranteed independent courts and safe contracts, roads, and so on, while passing the costs onto everyone else.It entrenches inequality and engenders disrespect for the law. It helps some (normally bigger) companies out-compete smaller ones.

Dont bash the corporations for engaging in tax avoidance: it’s the government’s job to sort it out

Remember the Golden Rule: who has the gold, makes the rules. Corporations lobby for the loopholes, and often manage to get what they want.

In addition, between the two poles of tax avoidance (legal, by definition) and tax evasion (illegal, by definition) lies a huge grey area. Often, one only finds out which side of the law a company is on after a court case or through disclosure of information held offshore..

Company directors must serve shareholders, so they must minimise tax by all lawful means

We say: Tax is not simply a cost. It is a distribution to society, out of profits; a payment in exchange for services provided that allow them to make those profits – the healthy and educated workforces, the infrastructure, the guarantee of contracts and the rule of law – and so on.

Second, those companies that engage in tax avoidance are engaging in economic free riding – they are taking the benefits from a country without paying for it. This is not only unfair, but it is economically harmful, undermines respect for the rule of law, and distorts markets.

Third, nowhere in the world does company law require directors to take actions that are not disclosed to their shareholders. But when companies are engaged in tax avoidance, they almost uniformly aren’t prepared to reveal what they are up to, to shareholders or the wider public. There is also no company law that says directors have a duty only to shareholders. Indeed, it is a duty of directors to maximise distribution to all stakeholders in economic processes. Read more on this topic here.

Tax is bad, and anything that minimises them must be good

We say: There is a balance to be struck, to be sure, on taxes. Some functions are best served by markets; others by the state, financed by taxes. ‘Tax is bad’ is a mantra repeated by many supporters of tax havens, and particularly in certain circles in the United States. The evidence points in exactly the opposite direction. The higher-taxed countries of the world are generally the richest, the most productive, and the most competitive. Countries like Denmark, Germany and Sweden lead the way in this respect. Over the past century, the period of fastest broad-based growth (around the world) was the quarter century from 1947 onwards, when top tax rates were extremely high, in excess of 90 percent in some countries. Many of the technological innovations we now take for granted, including mobile telephony, the internet and numerous medical advances, were funded through state investment during that period. The subsequent period of globalisation, amid rapidly falling tax rates, was a period of lower growth, rising debt and mounting inequality.

Tax havens help companies avoid getting taxed twice on the same income

We say: Tax havens do indeed do this, and it’s right that a company shouldn’t get taxed twice on the same income. But that’s not the whole story. First, you can sort these problems out in several other ways. (Such as tax credits, proper tax treaties, or unitary tax for instance). Second, when tax havens are used to prevent this so-called double taxation, they also create something equally harmful: double non-taxation. In other words, corporations that use tax havens not only avoid getting taxed twice – they often avoid getting taxed at all.

The havens that claim to care a lot about double taxation don’t seem to care at all about double non-taxation.

It is not tax havens, but high taxes, that cause tax evasion and avoidance

We say: Demonstrably false. Tax evasion has always been with us, but some people will try to dodge taxes no matter what the tax rate is.

But the great global tax evasion epidemic really took off from around the 1980s – exactly when the modern offshore system exploded onto the scene, and exactly at the time when marginal tax rates for high earners started to come down dramatically.. This timing is no coincidence: tax havens and their associated pinstripe infrastructure of bankers, lawyers and accountants actively and aggressively promote and provide tax evasion services.

The argument is the wrong way around. In reality, tax havens have forced the poor and the middle classes to pay higher taxes, to make up for those taxes the rich and powerful won’t pay.

Don’t tax corporations because the burden of the tax falls on workers, not on the corporation

We say: This is widely repeated as if it were generally true. Again, it is largely false. Corporation taxes do ultimately fall on people, somewhere: but the main burden falls on shareholders, not workers. Although shareholders are generally a mixed bunch, including our pensions funds, overwhelmingly shareholders represent the wealthier sections of society. The corporation tax is a progressive and precious tax.

When a company faces a sudden, unexpected change in its effective tax rate, its share price falls commensurately – clear evidence of that the burden falls on shareholders. And if corporation taxes didn’t fall on shareholders, then why would corporate managers spend so much time and effort trying to dodge them? It isn’t out of pure love of their workers. It’s also particularly important to tax financial corporations, which curbs the “too big to fail” problem where big banks can hold taxpayers to ransom. Not only that, but if you don’t tax corporations, they get to take the benefits from society without paying for them.
And, crucially, corporation taxes are a backstop to the personal income tax. Cut them to zero, and wealthy individuals will reclassify their earnings as corporate income, typically using offshore corporate structures, and escape tax that way.

4. Tax competition

Tax competition is a good thing. It disciplines spendthrift governments, forcing them to cut taxes and to compete with other governments to provide the best services for the lowest price

We say: This argument is bogus, anti democratic and built on economic fallacies.

The process of competition between companies in a market bears no economic relation to the process of competition between countries on tax, even if they both share the word ‘competition’ The former is generally a good thing; the latter is always bad: a race to the bottom.

Think about it like this. When a company cannot compete in a market it goes bankrupt, and a better one takes its place. For all the pain involved, this “creative destruction” is, in general terms, a source of economic dynamism. But what do you get when a country cannot “compete?” A failed state which can’t provide even basic essential services even down to protecting its citizens from crime and violence. The defenders of tax competition intentionally blur the lines between the good and the bad kind.

If there is a meaningful way in which countries compete, it is on things like good infrastructure, a healthy and educated workforce, the rule of law, and so on. All these things depend on tax. Why should tax cuts make an economy more “competitive?”

Next, unpack this sentence “Tax competition forces governments to cut taxes.” This word “forces” says it all: this ‘competition’ from tax havens is forcing democratically elected governments to do things their citizens don’t want. This undermines democracy and accountable government.

And what applies to tax applies to financial regulation, safeguards against criminal money, and much more besides.

Tax competition doesn’t matter. There is no evidence of race to the bottom towards a brutal ‘nightwatchman state’ which only protects the property of rich people

We say: Rich countries have generally preserved their absolute levels of tax as a share of their economies. What has happened instead is that tax competition forces countries to cut tax rates on mobile capital – which means, in effect, cutting taxes on the rich.

The outcome of tax cuts for rich people is that taxes now fall most heavily on poorer sections of the community. Tax competition is ‘compressing’ our tax systems so that rich people and powerful companies pay less and the poor people pay more – even though voters don’t want this.

Tax competition is real, it bites, and it hurts. This graph gives an example of what has been happening in the United States. here. Corporate taxes have plunged, while corporate profits have soared.

5. Developing countries

It’s not tax havens that drain developing countries, but rapacious despots pillaging their resources

We say: We’ve had 50 years of development aid and myriad efforts to improve governance, with patchy results. Don’t give up on those – but the time has finally come to properly consider the other side of the equation: illicit financial flows and tax havens. Those in rich countries must move beyond “blame (or help) the African” arguments and subject themselves to critical self-examination.

Providing elites in developing countries with untaxed, criminalised financial bolt-holes actively and dramatically undermines governance in these countries.

Consider this. How many Nigerians stash their money secretly in London or Switzerland? How many British or Swiss residents stash their cash in Lagos? There is a huge one-way net flow from poor to rich countries, and Global Financial Integrity estimated annual illicit outflows from developing countries at US$850 billion – US$1 trillion in 2008, and growing fast. Making financial flows more ‘efficient’ via tax havens, and providing secrecy, only accelerates these flows and makes them still more harmful.

Tax havens are a legitimate refuge from unstable currencies, political turmoil, confiscation

We say: There is nothing wrong with people placing their money overseas, in general terms. But secrecy and other offshore attractions are entirely unnecessary.

Imagine a Tanzanian, say, has a million dollars in a bank in France, earning five percent, or $50,000. If Tanzania charges tax on that at 40 percent, then the Tanzanian should pay $20,000 in tax, helping his country to pay its teachers and doctors and wean itself off foreign aid. Even with full transparency, the money is perfectly safe and Tanzania cannot “confiscate” that million dollars.

Offshore secrecy protects people victimised by criminals and despotic governments

We say: This is only true in a very narrow sense: it depends what you mean by ‘people.’ Tax havens provide escape routes for the wealthiest and most powerful members of society. If there is an unjust law or bad government, then to provide an escape route for a small, wealthy and powerful elite – the only constituency with the political strength to drive reform – is to undermine pressure for change. Everybody else must then suffer in silence.

Now ask yourself: Who will be the main users of secret bank accounts or offshore trust?. The bloodied street protestor? The anti-corruption campaigner? The trade union official trying to put food on the family table? The brave investigative journalist? Or will it be their corrupt, brutal oppressors – the Obiang Nguemas, the Muammar Gaddafis, or the Kim Jong-Ils – who use the offshore system to underpin their unaccountable powers? The answer is clear. Tax havens protect despots and oligarchs and help keep them in power. (Read more here.)

6. “Efficiency”

When corporate managers pursue tax avoidance they take their eye off what they do best – producing better or cheaper goods or services – and focus instead on engineering transfers of wealth from taxpayers to corporations.

Tax havens are nimble and flexible, and have a business-friendly regulatory environment

We say: This is true. And it is a bad thing.

“Nimble.” “Flexible.” What do these words mean?. They mean that if a country elsewhere has rules against something, tax havens will help you dodge those rules. Whatever the warts and failings of these rules – tax laws, inheritance rules, financial regulation, and so on – in general they are put in place for good reason, as part of society’s democratic bargain.

If someone said “we have a flexible approach to crime” – in other words, we don’t care if you are breaking another country’s laws – most people would be justifiably outraged by that. This is the same thing. And the entire business model of tax havens is built around this.

Secrecy jurisdictions are captured states: places where the politicians have been captured by financial interests – which are, in several cases, criminal interests. Democratic politics has been put on hold, in the “nimble and flexible” service of foreign finance.

Tax havens make international finance and markets more efficient

We say: They don’t. Or at least they do only in a very narrow, restricted sense – while generating inefficiencies that overwhelm those narrow efficiencies by an order of magnitude or more.
Efficiency is good. But you cannot look at efficiency from the point of view of an individual company: you must look at it from the point of view of the system as a whole. Bribery is “efficient” from the point of an individual company that wants to win a contract, or get its container quickly through a port. But that does not mean bribery is “efficient” in general terms.

Rules, laws and taxes are required if markets are to be efficient. And providing a corporation with escape routes from those rules, laws and taxes may seem “efficient” from the point of view of any individual corporation – but overall, it makes markets less efficient.

The users of offshore use lots of weasel words to describe what they do. One of the most pervasive is this term “tax efficient.” It sounds good – but again, what does it mean? It means efficient from the point of view of the tax avoider. Someone else, somewhere else, has to pay the taxes they won’t pay. The end result is one set of rules for the rich and powerful, and another set of rules for the rest of us. There is nothing remotely efficient about this.

Now consider how secrecy jurisdictions make markets less efficient: they promote and create secrecy, far, far beyond any reasonable requirement of commercial confidentiality. Efficient market theory rests on an assumption that markets are, in the jargon, “informationally efficient.” Offshore secrecy works directly and aggressively against this: it helps information to flow only to insiders, helping them earn excess returns.

Tax havens also make societies more unequal, where the rich and large corporations can free-ride off the backs of those less able to pay. The “nimble and flexible” regulatory environments offered by secrecy jursidictions protect the interests of insiders against wider sets of stakeholders. This is distorting and inefficient.

The offshore system creates impunity for elites in developing countries and helps dictators stay in power. They are a gigantic hothouse for crime, mafia activities, drugs smugglers, and even terrorist finance. All this distorts markets and society and undermines governance. How is any of this “efficient?”

Tax havens have helped bankers escape and undermine financial regulations. How efficient is that? Offshore secrecy protects and encourages all manners of crimes and frauds, insider trading, corruption, bribery, and any number of other things that distort markets and make them inefficient.

Tax haven incentives make company managers focus on tax and regulatory avoidance which frequently means they take their eyes off doing what they do best: making better, cheaper and more innovative products or services to supply to markets. This is highly inefficient.

Secrecy jurisdictions give advantages to large multinational corporations that help them out-compete their smaller, more locally based competitors on factors that have nothing to do with real productivity. And yet small and medium enterprises tend to be the real innovators and job creators. Offshore is effectively providing tax (and other) subsidies to the larger players which are typically less innovative, more bureaucratic and even more job-destroying. This makes markets less efficient.

Billions of dollars are spent annually by corporations on tax and legal advisers to cook up complex avoidance schemes to fox the tax authorities. This is a waste of resources and involves a tremendous opportunity cost – those are some of the world’s most highly educated minds that could have been put to use in a productive field.
Tax havens are instrumental in helping drain hundreds of billions of illicit dollars out of developing countries each year. How is this efficient?

Elites in developing countries have so often captured the proceeds of international borrowing, stashed their loot offshore, then left ordinary taxpayers and users of government services to pay for the resulting external debt service. The result, time and again,has been financial crisis after crisis. Who could argue that this is efficient?

7. Financial crisis

Tax havens had nothing to do with the latest global financial crisis

We say: Many commentators have bought into this one. But the claim is false.
First, understand what a secrecy jurisdiction (or tax haven) is. The offshore players want you to think that they are mostly Caribbean islands or wealthy Alpine nations, and that tax havens are mostly about tax. International lists of tax havens produced by the OECD, the IMF and others promote this fantasy. No, the most important secrecy jurisdictions are OECD countries, notably the United States and Great Britain, hosting offshore sub-jurisdictions such as Delaware and the City of London, and offshore satellites such as the Cayman Islands and Jersey. Luxembourg, Ireland and the Netherlands are major tax havens too. Until you understand the geography of offshore, you will never fully understand the latest crisis. It is also necessary to understand the core tax haven business model: to get rich by offering wealthy individuals and corporations escape routes from the laws, rules and regulations of democratic societies elsewhere.

Armed with these two insights, the havens’ central role in the crisis comes into view at last. They offered a “get out of regulation free” card to banks and other financial firms. By providing an offshore playground where banks could get around reserve requirements, restrictions on investment banking, and other parts of the social contract (and by puffing them up further with massive profits from secrecy-driven private banking they helped major global banks grow far faster than their onshore competitors: eventually becoming too big to fail.

By playing the offshore card – “don’t regulate us or we will go to Switzerland!” – financial firms forced politicians to capitulate to their demands. So financial institutions became not only too big to fail, but also too hard to control and regulate.

The secrecy jurisdictions served as conduits for massive illicit financial flows from poor countries to rich ones – notably to the U.S. and Britain. These illicit flows, estimated at hundreds of billions of dollars per year but unmeasured by conventional statistics, added to the more visible global financial imbalances between countries that many economists blame for the crisis. Illicit flows in the other direction were far, far smaller. The net result has been . . . one big problem.

Corporations began to festoon their financial affairs through offshore jurisdictions for all kinds of reasons: for stronger secrecy, for lower taxes, to escape financial regulations – and this generated massive complexity in their affairs. When crisis hit, nobody could work out what was going on. Even worse, the offshore system helped corporations conceal hidden losses.

Corporations, and especially financial corporations, had huge offshore incentives to load up on debt: while income from lending racked up offshore, tax-free, the borrowing costs – the other side of the same equation – were charged against earnings onshore in the countries where most of us live – and thus deducted against tax. This debt-loading added to the crisis.

Worse still – these problems have not seriously been tackled. Just as tax havens were central to the latest crisis – so they will be behind the next one. And as if that were not bad enough – by helping wealthy individuals and corporations shake off their tax burdens, tax havens are taking away our ability to pay for the gigantic mess they have created. Read more here:

8. Hypocricy

The global outrage against OFCs is hypocritical. By OECD standards, the biggest tax haven is the US. In an exercise of gross hypocrisy, the OECD does not blacklist its own member nations

We say: At last, something we can agree on.

The French poet Charles Baudelaire once said that the greatest trick the devil ever played was convincing the world that he did not exist. The OECD has helped convince (almost) everyone that tax havens are just a bunch of small islands or secretive Alpine redoubts. No. They are a diversion. The biggest tax havens are OECD member states and their dependencies, with the USA, UK, Switzerland, the Netherlands and Luxembourg among the lead culprits.

9. Other stuff

Tax havens are generally wealthy jurisdictions. So this is a good business model for countries to follow

We say: Small tax havens tend to be wealthier than other countries. But to say this is a good thing is a bit like an argument that points to the wealth of a corrupt dictator and his cronies as evidence that corruption is a good thing.

These places make their money by extracting fees from rich folk who want to escape the laws and rules of civilisation elsewhere. This is profoundly harmful. What is more, hosting these financial activities harms many countries, even as money floods in. There is the economic harm, whereby massive growth in offshore financial services crowds out other sectors. One effect is severe growth in inequality. Another is that the financial sector achieves the complete or partial political capture of the state and emasculation of opposition, just as the City of London has achieved in Britain.

It is a myth that tax havens drain countries of revenue. Instead, they are conduits for money to flow into nearby countries, helping developing countries access scarce capital

We say: First, some facts. They do indeed serve as conduits for money into other economies. The islands of Jersey, Guernsey and the Isle of Man alone provided over $330 billion in net financing to British banks in second quarter of 2009 – and that’s just one part of what they provide for the City of London.

But from here on, the argument falls down, on several levels.

First, many these claims rest heavily on work done by James Hines of the University of Michigan and a few others – research that is fatally flawed. One big reason is that they have ignored – for reasons known only to themselves – the issue of “round-tripping.” That happens when, say, a wealthy Indian wants to invest locally in India but doesn’t want to compete on a level playing field with other Indians. So they will take their money offshore to Mauritius, dress it up in offshore secrecy, then ‘round-trip’ it back into India, harvesting special tax breaks available only to foreign investors, and using the secrecy cover to get involved in insider trading, or building up secret monopolies in certain markets, or carrying out large-scale bribery, offshore, to get their way. See here, from the superb Africa-Asia Confidential, for some real examples. Nearly half of all foreign investment into India comes from Mauritius, a large share of which is not real foreign investment but in fact “round-tripped” Indian investment. The academic studies are measuring, to a significant degree, abusive round-tripping.

Second, look at the work of Global Financial Integrity, and see that the outflows drained from developing countries – $1.2 trillion in 2008 – dwarfs the inflows. The drain is real, and it is vast.

Third, much of the investment routed via tax havens into developing and other countries would have happened anyway. But because it comes in via a secrecy jurisdiction, the investors will often pay less (or zero) tax, potentially leaving that country’s taxpayers worse off. And when it comes to corporate investment: good projects tend to get financed. You don’t need tax havens for investment to flow into developing countries.

That is still not all.

The offshore inflows frequently harm their recipients too. One of the reasons for this is something called the “Dutch Disease” where huge inflows of money from one sector make price levels rise to the point where other sectors – agriculture, say, or manufacturing – can no longer compete against imports. And these sectors decline.. There is also a huge corruption effect from these easy inflows of money: something that economists call “rents.”
And so it is with finance. Money flows in, but in those countries that have been the biggest recipients – that is, the UK and the United States – the inflows have been harmful. Industry, agriculture, tourism and other such sectors in these places have been cut back savagely, leaving finance ever more dominant. This is what we at the Tax Justice Network call the Jersey Disease. Money flooding in due to offshore incentives has led to rising housing prices and rising debt. It has also puffed up the financial sectors in these countries, contributing to the Too Big To Fail problem of their banks, which have, also as a consequence, grown strong enough to capture the levers of political power in Washington and London.

The offshore system is too big and powerful to confront. Capitulate!

We say: this is two arguments in one: first, that we define tax havens too broadly; second, that we should give up trying to fight it. Both arguments are quite wrong, for several reasons.

First, on the definitional issue, we define tax havens (or secrecy jurisdictions) not in terms of specific tax or secrecy rules, but in terms of how they help people elsewhere escape rules and laws that they don’t like. This is quite a broad definition. But you will find, if you follow the analysis through properly, and without succumbing to political pressure from OECD countries that don’t like to be tainted with the tax haven label, that this is where the analysis will inevitably lead you. The problem is, quite simply, colossal – and it affects everything and everybody.

Second, on the idea of simply despairing and giving up – as advocated, for example, byPeter Preston in The Guardian, this opinion results from a lack of acquaintance with the facts. Take a look at the conclusion chapter in Treasure Islands, and you will discover that several of these approaches are already in the process of reform. Country-by-country reporting, for example, is already being adopted in some limited fora, and much wider acceptance is likely. The U.S. government is discussing a number of proposals for reform. Lobbyists will punch holes of course, but it is progress. The EU already implements widespread automatic information exchange through its Savings Tax Directive, and work is now being done to solidify and extend the scheme. The IMF’s Financial Action Task Force looks like it’s going to make tax evasion a predicate crime for money-laundering offences. And there is plenty more. So the ‘dream on!’ attitude towards reform reveals a basic lack of knowledge.

What is more – these counsels of despair often seem to rest on some notion that we must somehow replace the entire system: ride in on a white charger and cut off the dragon’s head with one well-aimed blow. We are arguing for markets to become more transparent, and describing ways to tackle a system that supports crony capitalism, rigged markets, insider trading and so on. These are efforts to identify and tackle the fault lines in global markets. The potential constituency supporting that – and therefore the potential for change – is huge.