Britain is leading moves to end the privileged status of tax havens as part of a planned “global new deal” to tackle the international recession.
Gordon Brown is believed to have won the support of other world leaders for a drive against offshore shelters used by large firms to cut their tax bills and avoid complex financial regulations. The deal could be done at a summit of world leaders in London on 2 April and form part of wider attempt to revive the global economy.
Speaking yesterday, Mr Brown said the time had come for world leaders to hammer out a “grand bargain” to rebuild the global financial system. He argued that the world had to act as one to supervise banks, including ending the practice of firms and financial institutions setting up registered offices in islands and small countries which offer lower tax rates than the countries in which they are based. Mr Brown said: “We want the whole of the world to take action. That will mean action against regulatory and tax havens in parts of the world which have escaped the regulatory attention they need.” He will face a daunting task in persuading many smaller countries that depend on attracting multinational companies to fall in line and he admitted that success depended on the “rest of the world agreeing with us that this action needs to be taken”.
But he added: “I am more confident now – having talked to world leaders – that we are in a position to take further action on this matter.”
President Barack Obama has been scathing over American companies paying tax offshore, which is believed to account for hundreds of billions of dollars lost to the US Treasury.
He said on the presidential campaign trail: “There is a building in the Cayman Islands that houses supposedly 12,000 US-based corporations. That’s either the biggest building in the world, or the biggest tax scam in the world – and we know which one it is.”
Mr Brown declined to name the tax havens he had in mind, but there are several under British jurisdiction. They include Jersey, Guernsey and Alderney in the Channel Islands, the Isle of Man, Bermuda, the Cayman Islands and the British Virgin Islands.
Mr Brown was speaking after talks in Downing Street with the International Monetary Fund’s managing director Dominique Strauss-Kahn and the World Bank president Robert Zoellick. He is due to meet European leaders in the next few days in preparation for the 2 April summit.
He defended his plans for a massive stimulus of the UK economy and said he was pressing other nations to follow the British lead. He added: “That is at the crux of how we can move towards recovery in the next few months.” A document published by Downing Street setting out its plans for the “Road to the London Summit” suggested that Britain could move to stimulate the economy – either by tax cuts or extra spending – if measures already in train were not effective.
Mr Brown sidestepped questions on the size of bonuses planned for RBS staff following a suggestion that they could amount to more than £900m, rather than the £175m suggested by the Treasury. He said any payments would be linked to performance and argued there would be only be a “very limited” chance of challenging those already written into existing contracts.
He also dismissed as “gossip” the disclosure that cabinet colleagues, including Harriet Harman, have been jockeying for position to succeed him. And he swept aside any talk of his accepting a job as head of a new global regulatory regime as a “lifeboat” from No 10.Reuse content