A complex issue

Any mass campaign that talks only of black money stashed in foreign banks, but ignores local black money is only a half-hearted effort.

Baba Ramdev had returned to Delhi’s Ramlila maidan with his favourite issue of bringing back to the country the billions stashed aborad in foreign bank accounts and tax havens.

This is an extremely important issue and if any credible campaign to end the present-day international network of tax havens emerges, this should be widely welcomed. However, while Ramdev should certainly get the due credit for taking this issue to masses, his campaign on the whole lacks credibility.

Tax havens are basically a network designed to facilitate and enrich the world’s big tax theives and economic criminals. Tax havens do so by providing secret, non-transparent banking facilities, money laundering facilities as well as a tax-free regime or a regime of very low taxes. Not all tax havens exhibit exactly the same characteristics, or follow the same rules, but by and large they provide the above mentioned facilities to economic and tax offenders directly or indirectly, to a lesser or greater extent. Nearly 80 such tax havens have been identified by public campaigns, and new ones are still being created. So clearly it is not a case of Swiss bank accounts alone, but a much wider and complex issue.

The existence of this network of tax havens basically works as a great comfort-zone for economic criminals and financial speculators all over the world, while depriving developing and poor countries of badly needed tax revenues. Of late even developed countries have started feeling this pinch, as reflected in the efforts of a US court to seek information on the bank accounts of thousands of extremely rich US citizens from a leading Swiss Bank.
Multinational companies also use the network of tax havens in shrewd ways to avoid paying billions of dollars worth of taxes, a big share of this to developing countries. The network of tax havens also provides the economic base of a range of criminal activities, and links of some terrorist organisations can also be traced directly or indirectly to tax havens.

It is clear that such a deeply embedded and complex system of massive illegal gains would create very strong vested interests around the world who would resist any serious threat to its existence. These vested interests can include some of the richest persons and institutions, some of the world’s biggest multinational companies and banks, and indeed even the governments of those countries who benefited at least in the short-run from the creation of these tax havens which attracted massive funds from all over the world.

United action

So what is really needed is a very well co-ordinated campaign involving united action together by as many countries as possible with the active participation of public campaigns, social movements and non-government organisations. The ultimate aim of such a campaign should be not to just bring some or all of the money stashed in tax havens, but to go further and end the entire existing system of tax havens. Unless this is done, some money may be brought in today from foreign banks but perhaps more will be sent again tomorrow.

The campaign by Baba Ramdev ignores many of these important dimensions of this complex problem. His is an oversimplified campaign which operates in an imaginary world where the Government of India has only to write a few letters and the entire complex edifice will collapse and the vast amounts deposited there will fall into the laps of waiting Indian people, ending poverty and hunger. The Baba has even managed to calculate how much will each Indian citizen get in the process.

Such a simplistic campaign draws attention away from the long-term, broad-based and admittedly difficult campaign involving the united action of many governments and non-government forces. When people don’t recognise the need for such a broad-based campaign, they are not really prepared for effective action. Apart from being simplistic, Baba Ramdev’s campaign is also partisan as he frequently appears to be targeting mainly a single political party or even certain individuals or families within this party.

The pride of place in such a motivated and narrow campaign often goes to whether the names of some individuals having bank accounts in tax havens can be obtained. But clearly, this can at best be only a relatively small ‘achievement’ in a task which is much wider and complex. As long as this campaign remains at such a simplistic level, truly effective action is unlikely but one can count on such campaigns to blow up even a small matter as a big achievement.

Also we cannot forget that several outfits related to Baba Ramdev are also being investigated for financial irregularities. Anyone who has closely followed the Baba’s rise to stardom from very humble beginnings cannot fail to note many serious questions such as those relating to land-grabs, wresting undue concessions, mysterious goings on in ashrams and accumulation of vast fortunes in a record time.

So it is hardly surprising that the Baba seldom campaigns against domestic black money. In a country with a vast domestic economy like India, regardless of how massive the money stashed abroad may be, there can be no doubt that the share of domestically held funds in the total black money of the country is high. Any campaign that talks only of foreign black money but ignores local black money is at best only a half-hearted effort.

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