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$3.1 trillion lost to global tax evasion

$3.1 trillion lost to global tax evasion

Tax evasion is a global problem and a recent report from the Tax Justice Network shows just how bad the problem is.

The Tax Justice Network analysed tax evasion in 145 countries around the world and discovered that it cost the global economy in excess of $3.1 trillion. That equates to 4.9% of global GDP!

The USA heads the tax evasion league table at £337 billion, followed by Brazil, Italy, Russia and Germany. The UK comes in at No. 9. The data suggests that the exchequer loses £69.9 billion to tax evasion each year – that’s almost 80% of the entire NHS budget.

The report, compiled by forensic accountant Richard Murphy, also showed that 87% of Europe’s total budget for healthcare is lost to tax evasion. In Africa, the percentage is 98% and South America loses a whopping 139% of its healthcare budget to tax evasion.

Despite a G20 pledge 2 years ago, little has been done to stop companies avoiding tax by transferring their funds to secret tax havens. The Cayman Islands, Hong Kong, Luxembourg, Switzerland and the US have all been considered safe places to stash secret funds.

The UK government is keen to stamp out that practice and it hopes the recently signed Anglo-Swiss deal will capture the assets of UK residents who have secreted their money in Swiss banks. Other countries are now trying to negotiate similar deals with Switzerland. HMRC has also set up the Liechtenstein Disclosure Facility so that taxpayers can declare previously unpaid taxes without risking criminal prosecution.

However, tax evasion is going to remain a problem until all countries around the world agree to tackle it. At a time of global economic crisis, $3.1 trillion is an awful lot of money to be losing to tax evaders!

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Look into my eyes…. by Johan J.Ingles-Le Nobel

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