A recent comment in Britain’s Guardian newspaper referred to the tax avoidance industry as “the mafia of our times” and went on to say that it “makes huge profits for itself and its clients, but inflicts hardship, misery, squalor and early death on many innocent people.”

And, of course, it doesn’t take a rocket scientist to conclude that the Cayman Islands is an integral part of this so-called mafia of our times.

What has prompted this latest scrutiny and commentary on the role of tax havens such as the Cayman Islands is a new report released by a British charity, Christian Aid, entitled “Death and Taxes” and which highlights the human consequences of the tax-avoidance and/or evasion industry.

The report is available online at www.christianaid.org.uk/images/deathandtaxes.pdf and contains some startling and, to many, damning statistics.

A full 50 percent of all world trade is reported to take place through tax havens and, as part of this, by means of tax avoidance perpetrated through complex structures, tax holidays, low royalty rates for mineral extraction and a variety of other tax avoidance schemes, a figure of $500 billion a year is said to be diverted from developing countries.

Estimates by the Organisation for Economic Co-operation and Development (OECD) in 2007 suggested that the sums then parked ‘offshore’ totalled anything from US$5 trillion to US$7 trillion – at least twice the amount of Britain’s gross domestic product).

According to the report, developing countries are estimated to lose $160 billion in tax revenues a year from tax evasion, mainly by giant multinational corporations. This is more than one-and-a-half times the combined aid budgets of the rich world.

The Christian Aid report describes in some detail a number of actual case studies, not only of the mechanisms of tax avoidance but also of the impact of the loss of revenue on some of the developing countries affected, in particular how this money could be spent to improve the quality of life for millions of people.

The $160 billion of illegal activity alone could provide decent healthcare and save lives in developing countries. Christian Aid estimates that tax evasion will have been responsible for the early death of some 5.6 million children between 2000 and 2015, equivalent to the entire population of Denmark.

Firmly entrenched in today’s fiscal environment, tax havens are accepted as a fact of life. But there is a moral ambivalence surrounding them. Their purpose is to enable businesses and individuals to trade unencumbered by taxes and financial regulations, no matter what the merit of those taxes or regulations might be.

However, as might be expected, Tim Ridley, chairman of the Cayman Islands Monetary Authority (CIMA) went on record in March as saying that attacks on offshore financial centres (OFCs) for helping individuals and businesses in the world’s major countries legally to reduce their tax liabilities are unwarranted.

Mr Ridley made the point that that paying tax is not a moral obligation. He also said that OFCs have a positive influence on the global economy, not a negative one.

Nevertheless, Mr Ridley recognises that, whilst OFCs such as the Cayman Islands face a challenge to win over their critics, he says it should not stop them from trying to educate the international community about their significant benefits.

We suspect that describing the situation as a challenge might now be seen as something of an understatement, given the series of recent negative events and publicity concerning the activities of tax havens in general and the Cayman Islands in particular.

This latest report may prove to be particularly damning in that it equates the tax revenues siphoned off by or through tax havens with mortality rates amongst the poor in developing countries.

Sooner or later more people are going to draw the parallel between the high standard of living enjoyed by Cayman residents with the grinding poverty found in other less well off countries that may be exacerbated by tax avoidance and/or evasion facilitated by the Cayman Islands.

What is said in the Christian Aid report may or may not be true. What Mr Ridley says may or may not be true. However, as someone once said, perception is paramount, reality is secondary.

We therefore wonder what, if anything, is being done to change the global perception of the Cayman Islands in the face of this mounting criticism and negative reporting.