December 9, 2008 3:22PM

The Pope Launches Ill‐​Informed Attack Against Low‐​Tax Jurisdictions

It is troubling so see collectivists (perhaps deliberately) confuse the acts of personal compassion and charity with the coerced redistribution imposed by government. This moral bankruptcy is particularly disappointing when it comes from religious leaders. The Pope, for instance, has launched an attack against so‐​called tax havens. As the UK‐​based Guardian reports, he apparently believes that low‐​tax jurisdictions somehow caused the financial crisis and he argues that the developing world will grow faster if corrupt politicians get more money to spend:

The Roman Catholic Church is calling for the effective closure of secretive tax havens as a ‘necessary first step’ to restore the global economy to health. In a policy paper from the Holy See, Pope Benedict pins the blame for the international financial crisis largely on ‘offshore centres’… The Pope points to estimates that the global fiscal deficit caused by offshore activities could amount to a staggering $255bn (£175bn) which is ‘more than three times the entire sum of [global] development aid’. …the reflection paper argues that tax havens, which banks use to escape the gaze of international financial watchdogs, facilitate the transfer of wealth from poverty‐​stricken nations to the rich world. …Intriguingly, the Vatican Bank…makes very limited financial disclosures, but the Rev Thomas Resse in his book Inside the Vatican claimed a cardinal told him in 1994 that it had $4bn in deposits and an annual income of $40m. Many experts believe this to be a spectacular underestimate.

This is not the first time the Pope has sided with big government over people. I addressed this issue last year, but he inexplicably missed my post on this topic. I guess this means the Pope has not watched my three‐​part series on tax havens. The Economic Case for Tax Havens would show him how low‐​tax jurisdictions boost global economic performance. The Moral Case for Tax Havens would warn him of the unpleasant consequences of giving too much private information to corrupt, venal, and incompetent governments. And Tax Havens: Myths vs. Facts would explain to him why attacks against low‐​tax jurisdictions are empty demagoguery. If the Pope is not a fan of youtube​.com, he would benefit from reading Tim Ridley’s column, which was published by Cayman News Service:

Pope Benedict commands huge respect but one wonders where his advisors are getting their economic and financial advice, possibly from the German Finance Minister or the French President, since it is so misguided and wide of the mark. On the first point, there is clear and incontestable evidence where the current crisis started, but it bears repeating that its origins were in the bad lending practices and financial engineering of regulated entities in major onshore economies, not in offshore centres. On the second point, His Holiness should also look much closer to home. The Vatican has a very patchy history of transparency, fiscal accountability and rectitude. It also has no problem with its own tax free status. It cut a deal with Mussolini in 1929 that effectively made the Holy See a tax haven itself.

…to charge that small economies that are able to operate without direct taxation and have thriving financial services industries are ipso facto responsible and punishable for the evils of tax evasion and official corruption beggars belief. Those charities, politicians, bureaucrats and now it appears, the Catholic Church, that clamour for the summary conviction and elimination of these small countries (who have few international votes and limited bargaining strength) should think long and hard about the implications if they get what they wish for. Small Islands like Bermuda, the Bahamas, the British Virgin Islands and the Cayman Islands will be impoverished and consigned back to the poverty of times gone by. The despots of the world will continue to find ways to pillage their countries’ treasuries and to have the proceeds available in one form or another in onshore financial centres in Europe and elsewhere (convenient after all for Harrods and Bergdorf Goodman). Will Oxfam, Christian Aid and the Vatican then send care packages to both Zimbabwe and the Cayman Islands?