Tax Havens Require Political and Economic Stability to Flourish

Tax Havens Require Political and Economic Stability to Flourish

political stability

Without political and economic stability, no amount of tax inducement can bring in outside investors. No company or individual, whether local or international, will feel comfortable making any kind of capital investment in any country where the political climate is characterised by upheavals and a lot of uncertainty. African instability itself explains why Africa still lags far behind other parts of the world in terms of economic development and the inward flow of investment funds.

In contrast, the political and economic stability of tax havens like Switzerland are a magnet for huge capital inflows. This is illustrated by the fact that since 2015 the Swiss Central Bank’s highest interest rate on deposits is -0.25 percent. The bank is charging depositors a fee for holding their money (investors are paying a fee for safety).

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"You’d be stupid not to try to cut your tax bill and those that don’t are stupid in business"

- Bono: U2