The task force statement concluding the conference (blogged yesterday is the keynote speech by Sen. Levin) makes an important connection between problems in achieving appropriate development in poor countries and illicit financial flows facilitiated by the shadow banking system.
The massive flow of illicit money out of developing nations, estimated at some $1 trillion per year, outpaces current levels of foreign aid by a ratio of nearly 10 to 1. Consisting of tax evasion, tax avoidance, and criminal and corrupt funds, this phenomenon is the most damaging economic condition hurting the global poor.
Therefore, the Task Force calls on the G-20 nations to recognize publicly that the flow of illicit money out of poor countries, facilitated by the global shadow financial system, cripples the ability of these countries to work their way out of poverty. Recognizing this linkage is a vital first step in creating the conditions to eradicate poverty in developing countries. The second step is taking action to stop these flows.
Tax evasion isn't just a wealthy person's neat trick of employing spiffy tax advisers to figure out how to hide money offshore and avoid taxes or a corrupt government executive's nifty way of planning ahead to protect himself and his family in retirement. It's a way of cheating everybody else out of the economic growth and good social programs that those taxes would have made possible.
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