Kapoor: Closing tax havens could pay for health care
PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. We’re talking to Sony Kapoor. Sony is managing director of Re-Define, Rethinking Development, Finance & Environment, an international think tank promoting financial-system reform, and he used to work at Lehman Brothers and had an inside view of Wall Street. Thanks for joining us again, Sony.
SONY KAPOOR, MANAGING DIRECTOR, RE-DEFINE: You’re welcome.
JAY: So in the first segment of the interview, we talked about three very straightforward but rather powerful things that could be passed as public policy that would limit the power of global finance capital. Number one, we said a Tobin tax, which is essentially tax international speculative trading at some point under 1 percent, more than 1 percent, depending how much effect you want to have. Number two, tax unearned revenue at least at the same levels of earned revenues, and close down tax havens, which would probably be in the trillions of dollars if one were to actually recoup or recover those taxes. And that’s sort of my question, Sony. There’s been this great debate in the last few months in the United States about paying for the health-care system, a new health-care reform. If tax havens were closed down, would that be in the kind of numbers that would pay for health care? And if the answer to that’s yes, how come we haven’t heard a word about it?
KAPOOR: You haven’t, because the finance sector and those who are enmeshed within tax havens don’t want you to hear about it. What you have is, if this closing down of tax havens were actually to happen, it’s not just that you will make an additional tax revenue of somewhere between $100 billion to $300 billion every year, which is a rough estimate of how much tax revenue is lost to tax havens by the United States.
JAY: But that’s almost the number they’re talking about for ten years of health-care reform, if they’re talking just under $1 trillion over ten years. So you’re talking about the same amount of money.
KAPOOR: Something along those lines. But it’s not just that you will recover. You will also recover—there will be a one-off benefit of a significantly larger amount when the money is first brought onshore. So what we are talking about is a possible one-off, significantly higher number for tax revenue, which perhaps could partially offset the costs of the bailout and make sure that the little people who pay taxes are not held liable for the ills of the financial sector, and in addition to that a recurring increase in tax revenue, which could go towards funding at least some, if not all, of the costs of providing health care, universal health care in the United States.
JAY: In [Ignacio] Ramonet’s article, he says this. And here’s another quote: “Financial globalization is a law unto itself and it has established a separate supranational state with its own administrative apparatus, its own spheres of influence, its own means of action. That is to say the International Monetary Fund (IMF), the World Bank, the Organization for Economic Cooperation and Development (OECD) and the World Trade Organization (WTO).” Do you agree with that statement? And, also, to what extent is it a law unto itself even within the United States?
KAPOOR: Well, this statement sounds a little bit too conspiracy-theory-like for me. I’m more nuanced in my opinion. But the fact of the matter is what you have is an international financial system that, at least in the case of the OECD, the rich economies, knows no borders and has been, at least until recently, operating more or less as a global cohesive whole. And you’ve had that development in the past 20 to 30 years from a very different, fragmented, nationally based—primarily nationally-based—financial system. And what you haven’t had is an accompanying improvement in international governance. So it’s not that—I personally am not against the idea of a global financial system. I think it can bring many economic benefits. But the problem comes about when there’s a significant gap between the financial system and its governance: governance of financial system has stayed firmly national, whereas the international financial system itself has become completely international. And it’s this gap which causes many of the problems we have seen, because it’s these regulatory gaps combined with the dark spaces, the secret spaces offered by tax havens, which allow banks and financial institutions to build up risks unseen, to do tax arbitrage, not pay their fair share of taxes, as well as to do other things which are going to cause systemic risk and pose risks to the rest of society.
JAY: Well, I think Ramonet is—I don’t think he’s really talking conspiracy. Like, one of the examples he gives—but I’ll give a more current example, ’cause it’s on our Web site today, where a Canadian mining company, after doing some beginning of exploration and preparation in El Salvador, the El Salvadoran government, under public pressure, decided that people in the area really didn’t want a gold mine and won’t give them a permit. And now the Canadian mining company, even though they’re not a member of—I think it’s CAFTA, the Central American Free Trade Agreement, through an American company they’re suing the government of El Salvador for millions of dollars to try to force them to give them permits, using the World Trade Organization and free-trade precedence, essentially, to overcome the national law which—they don’t want to give the permit. And that’s, I think, what he’s talking about, where the national states, especially smaller states, are losing the power to resist what big finance capital wants.
KAPOOR: Well, that is absolutely true. But the important thing to remember is that this pooling of sovereignty or this international movement of capital, it can also significantly benefit the people in these small economies. So the concept is not problematic, but the way things have happened, and the reality of messy politics, the reality of small states not having a proper voice at the International Monetary Fund or the World Trade Organization or at The World Bank, it’s that where the problem comes about. The United States can pretty much, at least until recently, punch left, right, and center above its weight or at its weight and get the IMF and the World Bank and the WTO to bend to its will. So the existence of these international organizations is better than not having any international organization, but what is needed is an improvement in the way that small states and those with weaker voices and minorities are represented in these institutions, to give them a much stronger voice.
JAY: And, of course, the problem is, even in a big state like the United States, the extent to which the finance sector is able to control the politics is to go back to these three things we talked about in segment one—very concrete proposals, obviously in the public interest, and more or less not even being talked about in the halls of Congress.
KAPOOR: What I like to say to some of my colleagues who complain about the problems of global governance is that even in a, you know, dynamic democracy like the United States, what you’ve had is this reality of 40, 50 million people without health care in what is by far the richest country in the entire world. And is that really representing the interests of the minorities? And 50 million people is a lot of people. So what we live in is an extremely imperfect world where even the mechanisms that we have at the national level are highly inadequate. And even when you give the example of El Salvador or some of these other smaller states, the representation of the weaker segments of society within these countries to these governments is actually much weaker than, for example, it is in the United States. So we have several layers of inadequate representation and domination by the more economically powerful interests, of which finance capital is the most visible.
JAY: Well, in the next segment of our interview, let’s talk a little bit more about what’s happening in terms of the crisis right now. We’re supposedly at the beginning of a recovery. The markets are up, bank stocks are up, bonuses are up, and unemployment is way up. So please join us for the next segment of our interview with Sony Kapoor.
Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.