CYPRUS - THE BUTTERFLY'S WING

PRESS RELEASE 25 MARCH 2013. THE END OF TAX-HAVENS.

MONUMENTAL, UNPRECEDENTED, EARTH SHATTERING, RAPID CHANGES TO THE GLOBAL FINANCIAL SYSTEM – TRIGGERED BY TINY CYPRUS.

IVANOVIC GULLIVER LEARNS OF THE
25% TAX FROM HIS CYPRIOT BANKER
AND IS SOMEWHAT ANNOYED.

I am a “futurist” with long (40 years) professional experience of economic, financial and tax-planning matters.

www.noelhodson.com/SW2000/Take-the-Plunge-NH-CV.pdf

Regardless of how negotiations between Cyprus and the rest of the European Union actually go – and how they are applied from today – the foundations of off-shore banks and tax-evasion-capital flight have been so shaken by the threat of retrospective taxation  that as a futurist I forecast a massive transfer of tax-haven funds back on-shore, back to the source nations. People will seek Safe-Havens instead of Tax-Havens. They have nowhere else to go.

HOW-SO?  The OECD estimated in 2010 that there was $21 trillion in tax-havens. It grows at about $1 trillion a year. It is more than enough to clear ALL national deficits, including the $16 trillion dollar USA “fiscal cliff” tax-receipts-less-tax-spend overdraft, and revitalise the World economy.

Most of the tax-haven-capital-flight funds are in tax-havens like Cyprus; in small banks supported by small local populations (Cyprus has 1.1 million souls). The Isle of Man has 83,000 people plus a Manx cat. Malta has 419,000. Iceland has about 250,000 people. Even the big-brand banks create small local separate companies for their banks in small tax-havens. 
(see JP Morgan’s dozens of tax-haven subsidiaries TREASURE HUNT ). 

Most of these small populations are not expert bankers and re-investors – they are lottery winning amateurs offering too much interest and too little taxes, overwhelmed by incoming hot-funds from major economies – economies many thousands times larger than their own. My recent blogs spell out the tax-haven meltdown arguments.

• THE LAST HAVENS - RIVERS OF CASH
•  
• CYPRUS & KILLER TAX-EVASION
•  
• CYPRUS BANK TAX AND PUTIN

When a crisis occurs, the national guarantees from tiny tax-havens for depositors are risible. As in Iceland and Cyprus the major economies have to step in to pick up the pieces. The UK did this for UK deposits in Iceland. But that, I predict, was the last such patching-up of the chaos caused by tax-evasion-capital-flight. On Cyprus, the EU firmly announced “No more Mr Nice Guy”.

Either impose taxes on the fast-flight funds or shut your banks and have the depositors lose all “their” funds. Source nations’ ordinary tax-payers will no longer pick up the tab to protect global tax-evaders. Let them eat cake! Or, more likely, eat bread and water in a prison cell.

A global, fleet footed tax-evader, caught by the Cyprus debacle, with a swingeing 20% or more impost – will immediately want to transfer the remaining 80%. But to where? All OECD countries have anti-money-laundering laws, now being vigorously applied against global banks to their very great cost. If the 80% is shifted to another tin-pot island and its shaky banks – that tax-haven may be forced by the big players to levy another 20% tax on the funds – and so on. The 80% will soon be whittled down to 2%.

Most OECD countries are now aggressively pursuing tax-evaders’ assets – in Italy, Spain, the USA, even in London (if the tax-evader is lower class) and long prison sentences are being imposed on the tax-planners. In America, the lawyers and auditors go to prison with their clients.   I SAY AVOIDANCE - YOU SAY EVASION  

IN BREAKING THE TACIT CONSPIRACY, THE TRADITION OF DISCREET DIPLOMATIC SILENCE ABOUT TAX-EVASION AND THE EVADERS, THE EU SHOCKINGLY PROVES THAT THERE IS NO HIDING PLACE – THE BUSINESS MODEL OF TAX-HAVENS IS BROKEN – SO MOVE YOUR MONEY ON-SHORE.

This influx of frozen cash, $21 trillion coming back to the big economies will recapitalise the whole world – and be the foundation of the next industrial-electronic era of global wealth creation. The 30 year long capitalist strike – by the 0.5% super-rich – will end in 2013 - except for those trusting souls who still keep their illicit cash in the Madof-Cornfeld-Coconut-Bank-of-Cayman, earning a fabulous 12.5% interest “guaranteed” (by whom?).

www.noelhodson.com/SW2000/Take-the-Plunge-NH-CV.pdf

(Mr) Noel Hodson,

Founding Partner of McVeigh Hodson Blackstone Franks Accountants.

16 Brookside, OXFORD, OX3 7PJ, UK 

Tel +44 (0)1865 760994