Yesterday a cross-party group of 87 MPs, led by Labour’s Margaret Hodge and Caroline Flint, called upon Theresa May to take action on tax avoidance by forcing the UK’s network of tax havens, based in former colonies and crown dependencies, to comply with UK transparency laws.
Listening to May’s acceptance speech back in June 2016, you would have significant reason to be hopeful of her actually delivering on a tax and social justice when she said: “When we take the big calls, we’ll think not of the powerful, but you. When we pass new laws, we’ll listen not to the mighty but to you. When it comes to taxes, we’ll prioritise not the wealthy, but you.”
Yet since that moment of the footsteps of Number 10 Downing Street, the PM has set about destroying the country she professed to care so deeply for. May recently threatened to turn the UK into a hard Brexit tax haven if the EU fails to grant the UK its extensive wish list upon triggering Article 50.
She seems to have forgotten that the UK is, by almost any definition, already a tax haven. It is labelled by the Tax Justice Network as the “biggest threat to global financial transparency”. By signalling her intent to go even further, slashing taxes for the rich and corporations, Theresa May has revealed her true colours. She cares not a dash for the “just managing” working class she claims to speak for.
Yet this is very same Prime Minister that 89 MPs are now pinning their hopes on to clean up the spider web of financial corruption which siphons global dark money straight into the City of London?
In 2016, the Italian mafia expert and Gomorra author Roberto Saviano labelled the UK the “world’s most corrupt country”, citing criminal financial flows of “dirty money” into London via the vast network of global tax havens spread across Britain’s former colonies and empire.
In December, Hodge said: “The Government published the Criminal Finances Bill to try and tackle corruption. While it includes some important and welcome measures, it is astonishing that the bill doesn’t even mention the UK’s tax havens. The MPs supporting my amendment [the the bill] are saying that the Government can’t possibly claim to be tackling corruption without getting a grip on its Overseas Territories, which are governed by the UK and facilitate all kinds of corruption and tax avoidance and evasion right across the world.” It is these networks of offshore tax havens that the French refer to as a “fiscal paradise” which the MPs rightly seek to target – but they also need to cast their net much closer to home.
The UK’s tax havens act as nodes in a complex web-like system. At the centre of that system is the City of London and the interconnected cluster of banking, legal and accountancy firms which dream up the kind of schemes exposed by the Panama Papers and the Swiss Leaks. These firms are collectively referred to as “enablers” of tax avoidance - and regulators are beginning to put them on notice.
Many of the firms renowned for devising tax avoidance structures are based and headquartered right here in the City of London, yet very few of the MPs shouting about tax havens ever seem to mention them?
Perhaps it’s because many of them spend millions of pounds lobbying and seconding staff to the Conservative, Lib Dem and Labour parties and MPs don’t like to bite the hand that feeds them?
Until our elected officials get serious about tackling the enablers of tax avoidance right here in the City of London and the UK tax havens that continue to exploit them the fight for tax justice will remain stuck in second gear.