Tax Havens: the Government’s review misses the point by miles
Just when the world has decided it’s time to have a crackdown on tax havens, the Government’s review of “British offshore financial centres” issues a progress report that seems to think the real goal must be to help these territories’ banking sectors get through difficult financial times.
I have written elsewhere of my concerns about the review. The chairman, Michael Foot, was always an odd choice if the intention was to really interrogate the role of havens, the review itself has been largely invisible, and the terms of reference did not really focus on the key issues in the international debate. But I’m an optimist, so I kept my fingers crossed. It hasn’t worked. The fundamental problem is that Foot is seeing the world through the eyes of the havens themselves – unsurprising given that he has spent his time on a tour of those havens. How else to explain this bizarre sentence in the report:
More broadly, the growing focus on tax avoidance and the emergence of national
initiatives such as the US Stop Tax Haven Abuse Bill will continue to shape international opinion
in the short to medium term. Each centre will need to take this into account in balancing the
real or perceived competitive advantages of current tax regimes with the need to generate
sufficient revenue to support its domestic economy.
Er, no. Each centre should start working out how it can become a responsible member of the global economy and stop undermining other nations’ tax systems.
The Review will now be opened up for wider consultation. Foot may get a shock when he experiences the strength of feeling there is about tax havens. But the Treasury needs to address the failings in this review now or else HM Government will be publishing a whitewash at precisely the time the G20 Finance Ministers might be deciding to get even tougher on tax havens at their meeting in St. Andrews in November. That would look even odder than this progress report and prove a big embarrassment to the PM and Chancellor.