Belize is a small country in central America, a former British colony which still has the Queen as head of state, and very beautiful as you can see from the picture, as well as being politically stable and safe - a rarity in central America.
It's also a tax haven. International Living had this to say about it:
In the early 1990s, the government of Belize consulted with professionals in Guernsey and several other top safe havens before drafting legislation that would enable Belize to achieve similar status.
Legislation included the International Business Companies Act, the Trusts Act, and the Offshore Banking Act, all of which have moved Belize to the forefront of the international financial service jurisdictions. Moreover, to attract retirees from other countries, Belize also adopted a “qualified permanent residence law,” which allows retirees to enjoy a tax-free lifestyle.
Individuals and companies establishing themselves in Belize are finding a government committed to privacy and a no-tax system. These advantages, combined with an English-speaking population and laws similar to our own, make Belize one of the world’s top tax havens–a truly safe locale for your money.
Income tax is charged at a rate of 25%, and for residents of Belize, the first $10,000 of their annual income is exempt. Pension income is also exempt.
To qualify for residency, an individual must be present in Belize for 183 days or more during a calendar year. There’s no graduated scale of taxation like in the U.S. and many other countries. Property taxes depend entirely on the type of property and start at 1% of the assessed value. Belize currently has no capital gains tax.
The bit about "present in Belize for 183 days" is important, because Britain has a similar provision, a relic of empire called Non-Domicile status, where if you spend 183 days or less in Britain, you arn't subject to any British taxes. So of course a number of Brits choose to spend half the year in Britain, and half the year in Berlize, with some time off for holidays in other places, and pay no tax at all. (By contrast the American Republic charges you tax on your worldwide income regardless of whether you spend any time in the USA, if you are a citizen. This is mitigated only by double taxation treaties, which means they won't make you pay twice - but if you are paying nothing to a place like Belize or Monaco, you pay the full American rate to Uncle Sam).
The most notorious of these tax exiles was a man called Michael Ashcroft, a conservative. In 2000, the Conservative Party proposed he be knighted and elevated to the House of Lords (under the British system all parties make nominees regardless of who is in power, in proportion to their seats in the Commons), and the Committee that scrutinises appointments to the Lords agreed to the ennoblement, on the proviso that Ashcroft became domiciled in Britain and paid full taxes to HM Treasury.
William Hague, then leader of the Conservatives, had a word with Ashcroft and then wrote to the Committee confirming that Ashcroft would become domiciled in Britain should he be made a Lord, and therefore would pay taxes. So the Queen tapped him on each shoulder with a sword and he was ennobled - and he then continued as before, not domiciled in Britain and not paying taxes. This continued till 2010, when public outcry meant that at last, ten years after he was supposed to, Ashcroft started paying taxes, as is due by someone who sits in the House of Lords.
Now the only reason he was able to carry out this farce for so long was because he spent 182 days in Belize, taking advantage of their easy laws. The person evading tax is only half the equation - the critical other half is the tax haven. If there were no tax havens, no taxes could be evaded.
What's in it for the tax haven?
In their imaginations, they attract millionaires and billionaires, who spend money in the local economy which will trickle down to everyone.
Unfortunately it doesn't really work out that way. There is a limit to how much a single person can consume - a person can only wear one set of clothes at a time and eat a certain amount of food before getting sick. They could spend it on nightclubs, cars, yachts etc, but most are too busy working to have the time to do anything other than indulge from time to time.
At the same times these millionaires have expensive demands - clean streets, safe neighbourhoods, good policing, good emergency services, a fully manned sound judicial system - the accoutrements of civilised life, which have to be paid for by taxpayers, other taxpayers, that is.
So what happens to their money? It goes into speculation - invested in someone's hedge fund, making Goldman Sachs rich via fees extracted, but mainly being lost on daft ventures like Maddoff's ponzi scheme, or sub-prime, or a stock market that is lower than it was in 2000. Some of it goes on speculating on commodities, pushing up the price, like the food price hike of 2007, which caused deaths in south-east asia. If the money had gone in tax it would have been spent on tax breaks for the ordinary person (who would have spent the lot on real goods and services) or on public goods - improving schools, hospitals, healthcare and so on.
So we come to the punchline of this sorry saga - Belize has indicated that it is about to default on it's debts. They can't afford to meet the interest payments let alone repay the capital. But rather than raising taxes modestly on it's no-tax population of tax exiles (given they are paying nothing, there is room for a rise without anyone feeling the pinch), they are seeking "renegotiation" with their creditors, presumably to get either a lower interest rate, or a longer repayment date, or a simple write-off.
If we could just persuade tax havens that their economic model wasn't really helping them, and get them to tax more normally, the majority of debt problems in the world would go a long way to being solved. All the money siphoned away by the Greek tycoons would go back to Greece, helping them to service their debt. All the money placed in Switzerland by dictators in Egypt, Tunisia, Syria and many other places, would be released, to help those countries to build modern infrastructure.
We've concentrated so long on trying to shame tax exiles into doing the right thing, which has been a failure, because they're plain shameless. Perhaps we need to concentrate on the other side of the equation, the tax havens, and put pressure on them to reform.
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