Illicit fund outflows cost BD $24.7b since 1976, Tax Justice Network research reveals
Bangladesh lost US$24.7 billion in illicit financial flow to foreign countries between 1976 and 2010; a research work done by the London-based Tax Justice Network (TJN) has revealed.
TJN's latest findings has also revealed that only US$1 is flowing into the poor countries as foreign aid as against an average outflow of $10 in illicit transactions to the developed countries.
TJN is an independent organisation launched in the British Houses of parliament in March 2003. It is dedicated to high level research, analysis and advocacy in the field of tax and regulations.
The TJN finding was disclosed Saturday at a press conference, organised by the Equity and Justice Working Group Bangladesh (Equity BD), held at the National Press Club in the city to officially launch the Financial Secrecy Index 2013 (FSI) prepared by TJN in Bangladesh.
The FSI, published by TJN on November 7 ranked jurisdictions according to their secrecy and the scale of their activities using 15 indicators.
Ahsanul Karim Babor, Deputy Director of Equity BD presented the keynote of the programme styled "TJN Financial Secrecy Index Report, Countries in Top Ranks: Bangladesh Perspective".
Mr Babor presented a summary of the FSI-2013 which ranked Switzerland, Hong Kong, UK, Bahrain, Panama, Mauritius, Malaysia, Dubai, Bermuda and Lebanon as 10 top countries out of 82 nations fetching illicit financial flow mostly from developing countries.
The paper mentioned that an estimated $21 to $32 trillion of private financial wealth is located, untaxed or lightly taxed, in secrecy jurisdictions around the world.
It said illicit cross-border financial flows add up to an estimated $1-1.6 trillion each year.
"Since the 1970s African countries alone are estimated to have lost over $1 trillion in capital flight, dwarfing their current external debts of just $190 billion and making Africa a major net creditor to the world".
The report also pointed out that those assets are in the hands of a few wealthy people, protected by offshore secrecy, while the debts are shouldered by broad African populations.
Citing from TJN's research on Bangladesh in 2011, Babor's paper said that Bangladesh lost $24.7 billion as illicit financial flow from 1976 to 2010 which is bigger in size than the budget for the last financial year (2012-13).
The paper also said that the country's black money is between 48 and 84 per cent of the Gross Domestic Product (GDP) and a big chunk of it is spent during the general elections.
Citing from a 2006 World Bank report, the paper said total expenditure in a general parliamentary election is more than Tk 200 billion in Bangladesh.
The paper suggested taking examples from Indian government to stop illicit financial flow and its recovery.
India published white paper on black money and illicit financial flow and recovered around $4.43 billion alone in fiscal year 2011-2012.
"In the last ten years, India has initiated the Double Taxation Avoidance Agreement (DTAA) with 88 countries. They have also reformed there tax administration," the paper pointed out.
Chief Moderator of EquityBD Rezaul Karim, director at the same organisation Mostafa Kamal Akanda, journalists Shwapan Bhuyian and Asjadul Kibria, joint secretary of Bangladesh Krishok Federation Md Mainul Islam among others spoke.
However, FSI-2013 also mentioned that besides the developing countries, richer nations are also victims of illicit money flow.
"In the recent global financial crisis, European countries like Greece, Italy and Portugal have been brought to their knees by decades of secrecy and tax evasion," it said.
It pointed out that a global industry has developed involving the world's biggest banks, law practices and accounting firms which not only provide secretive offshore structures to their tax- and law-dodging clients, but aggressively market them.
'Competition' between jurisdictions to provide secrecy facilities has, particularly since the era of 'the financial globalisation' took off in the 1980s, become a central feature of global financial markets, it said.
"The problems go far beyond tax. In providing secrecy, the offshore world corrupts and distorts markets and investments, shaping them in ways that have nothing to do with efficiency" the FSI said.
"This is not just a 'developing country' issue either: it hurts citizens of rich and poor countries alike" FSI said in its introductory remark.
Photo Courtesy of The Financial Express.
Article published in The Financial Express.