draining development.pdf - Khazar University

Tax Havens and Illicit Flows 345If we are looking for a measure to capture the relative importanceof jurisdictions so as to consider the appropriate policy response at aglobal level, this last criterion may be appropriate. Table 11A.2 comparesthe results of the use of the relative approach of Zoromé and theuse of the absolute approach, showing the top five jurisdictions identifiedby each approach. 7 Taking global contribution rather than relativeintensity in the provision of financial services to nonresidents leads toquite a different picture: per 2007 data, the former criterion points toCayman Islands, Luxembourg, Switzerland, the United Kingdom, andthe United States, while the latter points, instead, to Bermuda, CaymanIslands, Guernsey, Jersey, and Luxembourg.Finally, however, we may consider the implications of the secrecyjurisdiction approach. While the relative or absolute approach to offshorespecialization may capture something about the success of jurisdictionsin following this path, it has nothing directly to say about thesecrecy or otherwise with which this has been achieved.The ideal objective criteria for the identification of secrecy jurisdictionsmight therefore contain two separate components: one reflectingeach jurisdiction’s importance in the global provision of financial servicesto nonresidents (the absolute contribution approach) and onereflecting each jurisdiction’s (objectively measurable) performanceagainst one or more key indicators of secrecy.A final advantage of such a composite approach is that it would allowusers to step away from reliance on lists, which, by necessity, dictates thata given jurisdiction either does or does not meet certain criteria. Morepowerful both for policy making and for research might be a measurethat falls on a sliding scale. A method of measuring progress that is morenuanced than a blacklist may eventually produce more positive responses;see, for example, Kudrle (2008, 16), who, on the limitations of blacklisting,writes that “the evidence does not suggest that blacklisting made animportant systematic difference.”The FSI jointly produced by Christian Aid and the Tax Justice Networkreflects this analysis. 8 The FSI combines a secrecy score based onobjectively measurable criteria that reflect the secrecy or otherwise of thejurisdiction in key areas (for example, banking secrecy, the exchange oftax information) with a quantitative measure of the absolute contributionas discussed above, here labeled the global scale weight (table 11A.3). 9