• Treasure Islands

    Posted by Salome

    28 May, 2014

    Nicholas Shaxson is a full-time writer for the Tax Justice Network, and has written a book called Treasure Islands, which is an incredibly interesting and informative exposé on tax havens; how they came about, why they came about, and to what degree they have shaped our modern economic history. After reading the book, I can say with confidence that a tax havens have shaped everything about our modern economic context, in ways that you cannot even imagine.

    I have provided some key points from Treasure Islands which I found interesting, and which hopefully will give you a better understanding about why we have an entire Shine the Light campaign focused around tax justice.


    One of the key defining features of a tax haven is it’s foundation of secrecy and complete lack of transparency. This is a problem because if there is one thing that thrives in secrecy, it’s the criminal underworld. And we aren’t talking only about white collar crimes like embezzlement, which is what you typically think of when you hear the words tax evasion. The proceeds of things like ‘alien smuggling, racketeering, peonage (forced servitude and labour) and slavery’ all flow through tax havens.” (p.126)

    Tax havens were created for the sole purpose of escaping from “the duties that come with living in and obtaining benefits from society – tax, responsible financial regulation, criminal laws, inheritance rules and so on. This is their core line of business. This is what they do.” (p. 8-9)

    We are biblically mandated to actively oppose and seek to eradicate injustices such as human trafficking and slavery. That includes the financial systems that not only support them, but ensure that they thrive.

    Secrecy surrounding tax isn’t just bad news for how it aids in criminal industries. Having secrecy at its very foundation also changes the ways in which legitimate business operate. Saxton, when looking at the offshore system says that it was “helping criminal enterprises imitate legitimate businesses, and encouraging legitimate businesses to behave more like criminal enterprises.” (p.129)


    “Developing countries lost up to a trillion dollars in illicit financial outflows just in 2006 – that is, ten dollars out of every dollar for foreign aid flowing in.” (p.158) Take Africa as an example; their governments grow weaker and develop a greater dependence on aid from the very countries that are strengthening the offshore system and facilitating illicit outflows in the first place. This is simply outrageous.

    A study done by the University of Massachusetts in 2008 took 40 countries in Africa, and measured the capital flight from these nations from 1970 -2004. They found that from this 35 year period, it amounted to $420 billion lost through capital flight. If you include imputed interest earnings, that figure rises to $607 billion.  This figure becomes truly shocking when you consider that, “the total external debt of these countries was ‘only’ $227 billion.

    The net external assets of Africa far outweighs its debts, however these assets belong to ‘a narrow, relatively wealthy stratum of its population, while the external debts are borne by the people through their governments.” (p.158) 

    As a US Federal Reserve official stated, “the problem is not that these countries [who receive aid] don’t have any assets, the problem is they’re all in Miami.” (p.161) Shaxson has lived in various different African countries during his life, and he has this to say about what he saw there:

    “Having watched people die before my eyes in Angola; having seen an otherwise pretty six-year-old Angolan girl who, without access to basic medicine, was losing a fight with an infection that had rotted a hole in her cheek the size of a golfball, I am personally acquainted with some of the ways Africa’s people ‘bear’ their public debts, in the forms of poverty, war, a hopeless lack of real opportunities, and the regular physical and economic violence perpetrated against them by corrupt and predatory elites.

    Raymond Baker, director of GFI, was quite right to call the emergence of the offshore system ‘the ugliest chapter in global economic affair since slavery.” (p.158)

    Shaxson makes the link between corporations and corrupt governments who abuse tax systems to European nobles who used to “consolidate their unaccountable powers in castles, the better subjugate and extract tribute from the surrounding peasantry.” (p.184)  This seems like a harsh comparison, but the more I read up on this topic and the experiences of those living in developing nations who are bearing the burden of the offshore system, the more realistic the comparison seems.

    It is not just those who are living in poverty who are affected by the offshore system, everyone is affected, including you. “The offshore system is perhaps the strongest determinant of how political and economic power works in this world. It helps rich people, companies and countries stay on top, for no good economic or political reason. It’s the battleground of the rich versus the poor, you versus the corporations, the havens against the democracies – and in each battle, unless you’re very rich, you are losing.” (p.280)

    For something that I knew nothing about before I heard of Micah Challenge, I have become deeply, passionately committed to this cause, to the Shine the Light campaign and all it aims to achieve. I implore you to do your own research, and develop this passion of your own for tax justice. Develop not only your own passion, but God’s passion.

    “Administer justice every morning; rescue from the hand of the oppressor the one who has been robbed.” Jeremiah 21:12

     This is one of the most important struggles of our time.  I want to be able to flick through a history textbook in the future and read a chapter titled “The Fall of the Offshore System.” Wouldn’t you?



    Salome Nel is Micah Challenge's Communications Intern for 2014.