Opinion | Global tax evasion is a penalty on health care, education, climate change and more. The world cannot afford it

Hong Kong remains a major tax haven, while Britain, Japan and the US continue to show a real unwillingness to fight financial opacity. The world is losing tax revenues when it needs more money to fight epidemics such as Covid-19 and climate change

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A protest against tax evasion in Iceland in 2016 following leaked tax documents known as the Panama Papers. Photo: Reuters

Published: 10:15am, 22 Feb 2020Updated: 1:00pm, 22 Feb 2020

The Covid-19 epidemic facing the world, and Asia in particular, shows how linked and dependent we are as individuals and nations, and highlights the desperate need for international regulatory cooperation.

That same strong cooperation is needed to save civilisation from the destruction of public health by rampant tax evasion, which is enabled by secrecy. Despite recent progress, financial opacity remains unacceptably high, according to the Financial Secrecy Index published this week by the Tax Justice Network, a financial advocacy group based in Britain.

Thanks to the courage and energy of journalists and whistle-blowers, global transparency has improved slightly. On average, countries have reduced their contribution to global financial secrecy by 7 per cent since the previous index in 2018. But there is still a lot to do.

Take Hong Kong. It improved its secrecy score after adopting the automatic exchange of financial account information, or AEOI, based on the common reporting standard by the Organisation for Economic Cooperation and Development to promote tax transparency and fight cross-border tax evasion.

But Hong Kong is still a huge player and remains one of the world’s fastest growing tax havens. It remains at fourth place on the Financial Secrecy Index, barely overtaken by the Cayman Islands, the US and Switzerland.

Hong Kong still offers a wide range of offshore services, including tax exemptions, transfer pricing facilities, escape routes from Chinese exchange controls and various forms of financial secrecy, such as the use of opaque companies and trusts that can assist with tax evasion and other crimes.

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