A year ago none of us expected David Cameron and George Osborne to stand on the UK and global stage and herald themselves the tax heroes that the world desperately needs. But that’s exactly what they have done by promising to tackle tax dodging and tax havens at the UK’s G8 Summit.
It’s about time someone got serious about tackling tax dodging. Today trillions of dollars are stashed offshore in tax havens, far beyond the reach of the tax man. This means that these tropical islands and small land-locked countries are sucking hundreds of billions out of public budgets here and in the poorest countries, forever. This is money that could create jobs and opportunities here in the UK as we continue to be buffeted around on the rocks of austerity, and face draconian cuts to welfare. Crucially for the poorest countries it is money that could, if recouped, help the one in eight people in the world who will go to bed hungry tonight.
Cracking down on tax havens could be a game changer here in the UK, and around the world. So far so good. But today, George Osborne and the other G7 finance ministers will not be talking tax. This close to the Loch Earne Summit, it begs the question: why not?
There is an elephant in the room with George as he sits down today. Ten of the world’s tax havens are UK-linked territories - the British Overseas Territories and Crown Dependencies. The clue is in the names.
Nobody can deny that there is a job to be done to get these territories back on the straight and narrow. The Enough Food for Everyone IF campaign, which is backed by almost 200 organisations including Oxfam, took that message directly to the Treasury yesterday. New research released by the campaign for today’s meeting shows that if the money in the Cayman Islands really did belong to the people of the Caymans, it would mean each of them, on average, was worth $29.3 million. This is not because all Caymanians are dripping in diamonds and sitting on personal fortunes. It’s because their shores are attracting trillions from around the world due to the islands' tax haven status – including secrecy for sale and low tax rates. There are 174 companies operated by Barclays in the Cayman Islands, a territory with a 0 per cent effective corporate tax rate. And the story is not so different in the other UK-linked tax havens. It is an ugly truth that the UK needs to face up to.
There is a real risk that our leaders see the G8 tax job as done. Last week they did announce co-operation with the British Overseas Territories. A deal that will see these tax havens – Anguilla, Bermuda, The British Virgin Islands, Montserrat and the Turks and Caicos Islands – sharing tax information with the UK. This could be good news for us, but does nothing for the poorest countries, so unless there is more in the UK’s bag of G8 tricks, this is far from good enough. It would be a categorical failure on their own objective of ‘putting their own house in order and helping developing countries to prosper’ if this is all they have to give.
It does show that where there's political will there's a way. So the real test now is whether the Government is willing to extend that will to helping the poorest countries in the world. With just 5 weeks to go, it’s time to get serious.
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- Cayman Islands
- Department Of Finance
- George Osborne