WELCOME TO THE REAL DODGE CITY; EXPOSED: The Tax Havens Hiding Billions from the Taxman. and Britain Is One of the Biggest

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Byline: NICHOLAS SHAXSON

TAX havens are bigger and badder than most of us realise. One way or another, half of all world trade is routed through them.

Much of this business is technically legal - but that's not to say it isn't a problem.

Pretty much every big name on the high street uses them to cut their tax bills - helping them undercut your local shops for reasons that have nothing to do with real efficiency and everything to do with bilking the taxpayer.

And the biggest users are the banks. Royal Bank of Scotland, Lloyds and Barclays alone have 550 offshore subsidiaries.

It's not just about tax. Offshore financial regulation is lighter meaning banks can grow faster. They have used tax havens for years to amass wealth and power like never before.

But there's a big myth out there. Most people imagine tax havens as the palmfringed Cayman Islands, or Monaco and Switzerland.

These are tax havens, of course, but if you analyse what these places offer - secrecy, low or zero taxes, looser financial regulation and other escape routes from the rules of democratic society elsewhere - you will find that the world's biggest providers of these things are the United States, Luxembourg, Switzerland, the Netherlands, Ireland&and the UK.

Yes, we live in one of the world's biggest tax havens.

Two things are happening here. First, ordinary taxpayers are being stiffed by our own wealthy individuals and corporations sending their money offshore.

Second, Britain sucks money back in from elsewhere by being a tax haven.

My book Treasure Islands tells how Britain runs a network of semi-independent tax havens around the world, from Bermuda to Gibraltar to Jersey.

These places hoover up money and business from places nearby and send it to the City of London. Jersey alone provided $218billion in bank deposits for city banks in the second quarter of 2009. …