Flawed data is the reason behind the vilification of international financial centres, two top professors find. Their report, Moving Money, published by two world-renowned academics, revealed that international financial centres do not deserve the bad headlines they garner. Instead, they play an essential role in helping funds move around the global economy and increasing international investment. Poor data, analysis and mistakes have also led to allegations that international finance centres allow significant illicit capital flows enabling individuals and multinational enterprise to avoid paying a "fair" amount of tax.
In the report, the authors, Professor Andrew Morriss from the University of Alabama School of Law and Professor Richard Gordon of Case Western Reserve University, say that allegations by political leaders and others that offshore financial centres enable multinational enterprise to avoid paying a "fair" amount of tax — and that they enable wealthy individuals to evade paying any tax, much of it on ill gotten gains — are once again garnering headlines and inspiring government action.
Moving Money concludes that the reduction of trading barriers is helping both developed and developing countries. The World Trade Organisation (WTO) has found that the growth in trade has caused the doubling of income in 10 developing countries with a total population of 1.5 billion, and that the overall annual growth in the world economy – an average of 1.9 per cent per year since World War II – is largely down to increased trade and global finance.
According to Chief Executive of Jersey Finance, Geoff Cook: "This report presents a much needed balanced view of the role of international financial centres in facilitating cross-border finance, safeguarding investments, and contributing to the global economy. Public opinion around international finance is swayed by over-heated rhetoric and calculations often not based on fact, as rigorously demonstrated in this report." He added that "some discussions around tax evasion distract from the crucial debate around tax policy and international business, which should be based on the economic underpinnings and not baseless arguments. Moving Money is an extremely important contribution to the global debate in this area."
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