Saturday, September 26, 2020

"Moments in money: The first tax haven"

From Spear's Magazine:
Some academics believe that tax havens have existed almost as long as the concept of tax. The earliest example appeared in 166 BC, during the reigns of Emperors Marcus Aurelius and Lucius Verus (they overlapped), in the Aegean island of Delos. The Romans set it up as a free port with no taxes or customs duties, in order to undercut nearby Greek island of Rhodes, which had not yet submitted to the Pax Romana.

As a result Delos prospered as a centre for trade in ivory, textiles, wine, wheat and spices from Africa and the Middle East, and Rhodes took a slide. The real ascent of tax havens began after the First World War, however, when European countries in particular began raising levels of tax to pay for the war and reconstruction. While in the US New Jersey and Delaware introduced attractions for ‘non-resident’ companies, it was neutral Switzerland that emerged in the 1920s as the world’s favourite tax haven.

In 1913, Swiss banking holdings were 26 per cent those of France; by 1929 that was 79 per cent. A League of Nations report noted that the banking assets per head of population in Switzerland were $714, compared to $438 in the US and $292 in the UK. In fact, the true fi gure was perhaps twice that, as many assets were held off-balancesheet – small wonder this has been described as the ‘golden age’ of Swiss banking....