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According to Gabriel Zucman, a professor of the University of California at Berkeley, 37.1 percent of Portugal’s riches are tied up abroad, making it the European country with the highest ratio of cash held by institutions outside of its borders
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Greece comes a distant second, with a ratio of 25.8 percent of its Gross Domestic Product stashed in offshores, followed by Ireland with 19.5 percent, France (18.1 percent), the United Kingdom (17.1 percent) and Germany on 15.5 percent.
Zucman, who is a French national with a PhD in Economics from the University of Paris, is only 30, but has once again made headlines this week with these revelations to French magazine L’Obs.
He explains that 8.6 billion dollars is currently tied up in offshore companies, and says that his research has shown that this number is on the constant increase, which makes a perfect breeding ground for increased social inequality.Zucman first gained international prominence following the publication of his hard-hitting book The Hidden Wealth of Nations late last year.
In comments this week to L’Obs, Zucman argues: “If it is easier to not pay taxes when a person is very wealthy, then this cements inequalities even further, with the rich becoming even richer: they invest their wealth in high return investments and pay little or nothing in the way of taxes on these earnings.”
He explains further that while Panama has been a front-runner in offshore and tax evasion news recently, almost half of offshore wealth is actually found on the European continent. According to his findings, Switzerland holds 27 percent of this wealth, while 19.8 percent can be detected in Luxembourg, the Isle of Man, Belgium, Austria, Jersey and even the United Kingdom.
In his book, Zucman argues that tax havens are at the heart of financial, budgetary and democratic crises.
Zucman’s definition of tax evasion is basically one whereby a taxpayer limits the amount payable to the taxman by shifting assets to another country.He further reveals that when studying the world’s richest people (with fortunes in excess of 50 million euros) and who account for 0.01 percent of the population, “the likelihood of them having money in an offshore is 70 percent.”
He told L’Obs that this figure drops dramatically when taking into consideration ‘less’ wealthy people.
Only 20 percent of individuals who boast fortunes of ten million dollars or more were likely to actively evade taxes, while only one percent of taxpayers worth two million euros sought fiscal paradises to channel money.
He concludes in his interview that this trend could have two possible explanations: “First, extreme wealth affects morality. A lot of money corrupts the spirit. The second possibility is that these are the people who do not have much respect for the law, namely tax laws, making them even richer.”
Despite Portugal topping the Zucman black-list, tax authorities here have spent the past few years upping the ante in retrieving unpaid taxes.
Since 2014, more than 83,000 homes have been attached by the taxman, while figures out earlier this year also revealed that the taxman set a new record in coercive collections in 2015. While the target set out at the beginning of last year had been 1.1 billion euros, tax collectors improved on this by almost 20 percent, raking in 1.3 billion euros, for an average of 3.5 million euros a day.
However, it remains unclear how many of Portugal’s super-rich were on the receiving end of the taxman’s efforts to replenish the state’s depleted coffers.
