Every time there are revelations about tax havens, there is panic among the economic groups involved with them. They channel their wealth through these territories that rent out their sovereignty to hide dubious business.

The so-called tax havens are the real brothels of capitalism. In these territories, every kind of economic practice is carried on that would be illegal in other countries, capturing and laundering millions in financial resources, such as those derived from the arms trade, drug trafficking and other illegal activities from other countries. They also serve to circulate capital without paying taxes that should be paid in their countries of origin.

The tax havens, some 60 to 90 in the world, are micro territories or States with weak or nonexistent tax legislation. One of their common characteristics is the practice of receiving capital in an unlimited and anonymous way. These are countries that commercialize their sovereignty, offering favourable legislative and tax regimes, whatever their origin may be. Their functioning is simple: various banks receive money from the whole world and from any person, offering low banking fees, compared with the averages of banks in other places.

The tax havens have a central role in the world of dirty finances, that is to say, with capital originating in illicit or criminal activities. Mafias and corrupt politicians are assiduous clients of these territories. According to the IMF, money laundering represents between 2 and 5% of the global GDP and half of international capital flows; between 600 billion and 1.5 trillion dirty dollars circulate through or reside in these States.

The number of tax havens increased with the financial deregulation promoted by neoliberalism. Technological innovations and the constant inventions of new financial products that escape any regulation have accelerated these phenomena. 

Traffic in arms, firms of mercenaries, drug trafficking, international prostitution, corruption, assaults, kidnapping, contraband, tax evasion, etc., are the sources that feed these States and the mechanisms of money laundering.

A Minister of economy from Switzerland -- one of the biggest and best known tax havens -- declared, on a visit to Paris, in defense of banking secrecy -- the key that allows these phenomena to exist: "For us, this reflects a philosophical concept of the relation between the State and the individual". And he added that secret accounts represent 11% of the brute added value generated in Switzerland.

In a country such as Liechtenstein, the maximum income tax is 18% and on lower fortunes it is less than 0.1%. This country specializes in harbouring holding societies and financial transfers or bank deposits.

A society without banking secrecy, where everyone knows what each person earns, could be considered a paradise[1]. But the contrary is the case, because it is a question of “paradises” or havens for illegal capitals, whose origins are illicit activities.

These havens exist, they are well known, almost no one dares to defend them, but they survive and grow, because they are like brothels: illegal, camouflaged, but indispensables for the survival of failed institutions, that find in these spaces the indispensable complements for their existence.

(Translated from the Spanish for ALAI by Jordan Bishop)

- Emir Sader, Brazilian Sociologist and Political Scientist, is the Coordinator of the Laboratory of Public Policy of the State University of Río de Janeiro.