In mid-August, it was revealed that more than 4,000 of UBS AG’s U.S. clients allegedly were hiding assets offshore. While that’s a blow for the Zurich-based bank, a new poll suggests the scandal will have almost no impact on tax havens in general.
According to a Compas Inc. poll, which surveyed 115 Canadian executives, 88% of respondents think governments will never be able to rid the world of offshore accounts. “Taxes will always be cheated on,” wrote one CEO.
Not only will offshore accounts live on, but more than 60% of respondents think the people who use them (mainly the very rich) will relocate to lower-tax regimes or live on a yacht in international waters rather than give up their tax haven.
It’s estimated that the UBS accounts hold $18 billion — not chump change, but not enough to have any real impact on the U.S. deficit, say 70% of the CEOs. They are split, however, on whether or not the crackdown will put pressure on governments to keep tax rates from growing.
While it’s unlikely many respondents will know someone caught up in the clampdown, 4% admitted that they know someone who uses a tax haven, while 3% revealed they know a CEO of a multinational who uses artificial pricing in transactions between high- and low-tax regimes.
Opinions differ on why people are evading taxes in the first place. One exec says the taxation system is broken. “There is something fundamentally flawed with assessing more tax to those who earn more,” wrote the CEO. “The system destroys ambition to succeed.”
“Until government gets its own house in order, there will be a thriving underground economy,” another executive responded. “When you consider the level of tax Canadians pay, it seems the government is the one promoting people to be less than honest.”