The global super-rich are using loopholes to hide £13 trillion from the taxman, a report has found.
The figure is more than the gross domestic product of the United States and Japan put together and their failure to pay is a threat to the very essence of democracy, campaigners have warned.
The report, The Price of Offshore Revisited, is the most detailed ever compiled and shows money being siphoned into offshore banks instead of being invested at home.
James Henry, the report author and former chief economist at consultancy McKinsey, says the assets of “high net” individuals are being protected by “professional enablers” taking advantage of a “frictionless global economy”.
According to his calculations, £6.3tn of assets is owned by 92,000 people – or 0.001 per cent of the world’s population.
In oil rich states and developing countries, this often means the assets are held by the few but the debts are shouldered by all, he said.
He adds that for many developing countries, the amount of money channelled offshore since the 1970s would be more than enough to pay their current crippling national debts.
John Christensen, of the Tax Justice Network, which commissioned the research, said the problem went beyond money and to the heart of the democratic system.
He said he was unsurprised by the £13tn figure – and believed the true amount was even higher once assets such as yachts and private jets were taken into account.
“What the figure doesn’t include is the non-financial assets, the yachts, the jets, the works of art, the racehorses, the real estate,” he said.
“We know that this is a massive issue as well. Many of the super-rich hold a very large proportion of their wealth in non-financial assets.
Mr Christensen said that the amount could make people doubt politicians and the process of democracy.
He said: “I know that people do feel angry. For example, I have watched the change in the US – now people are saying ‘we have been cheated on a massive scale.’
“I pick up the same in the UK. People feel ‘why are our politicians who talk about tackling tax avoidance all the time doing nothing about this at all?’
“I think there is real anger about the loss of public services and because ordinary people are having to pick up the slack because rich people are not paying their share. I would say this is a defining moment for democracy, because unless people feel governments are treating tax-payers fairly, our faith in democracy disappears.”
He likened it to the British faith in queuing, and said once one lost faith in the system one lost the will to stand in line.
He added: “When you get the message that people at the top are avoiding tax, people think, well, why the hell should we do it? It becomes very corrosive.”
Mr Henry used data from the World Bank, International Monetary Fund, United Nations and central banks.
The report also highlights the impact on the balance sheets of 139 developing countries of money held in tax havens by private elites, putting wealth beyond the reach of local tax authorities.