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Sanders attacks tax dodging through Bermuda

US Democratic presidential hopeful Bernie Sanders has pledged a crackdown on tax avoidance involving Bermuda and other offshore jurisdictions.

Mr Sanders, currently trailing Hillary Clinton in the race for the nomination as presidential candidate, made the promise on an online political channel in America.

Mr Sanders said he would use the cash raised to fund education.

He explained: “We are going to provide free tuition in public colleges and universities by imposing a tax on Wall Street speculation.

“That tax will pay completely for tuition in public colleges and universities and substantially lower interest rates on student debt.”

He added: “We are going to rebuild our crumbling infrastructure with a trillion-dollar investment to create 13 million jobs by doing away with loopholes that currently exist by which corporations can stash their money in the Cayman Islands and Bermuda and not pay, in a given year, a nickel in federal income tax.”

The blast is the latest attack on big firms using islands like Bermuda to cut their tax bills at home.

The District of Columbia — which covers the US capital Washington — earlier this year added Bermuda to a list of tax havens.

But the municipality did a major U-turn and repealed the 39-jurisdiction list only a week after it came into effect.

The move sparked a defence of the Island by Finance Minister Bob Richards, who pointed out that Bermuda had signed a tax information exchange agreement with the US and that then-US Consul General Bob Settje had said when Bermuda signed the USA/Bermuda Foreign Account Tax Compliance Act (Fatca) in 2013 that his government did not consider Bermuda to be a tax haven.

The District of Columbia changes, even if not repealed, would have had to have been approved by the US Congress before becoming law.

And Democrat president Barack Obama's budget proposals last February included a bid to end tax deductions for reinsurance payments to affiliated foreign companies and on overseas earnings.

The move, however, foundered amid warnings it would cost the US $4 for every one dollar it brought in to US coffers and that the US gross domestic product would lose $1.35 billion over the long term — around double the revenue it would collect.

The Bermuda Government said at the time that the same proposals had cropped up in previous US budgets and been rejected by the US Congress.

The plan would also have needed approval by the Republican-controlled Senate and House of Representatives, while many Democrats also signalled their opposition.

Tax pledge: Democratic presidential candidate Bernie Sanders

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Published December 29, 2015 at 8:00 am (Updated December 28, 2015 at 7:34 pm)

Sanders attacks tax dodging through Bermuda

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