I can only express my amazement at the story uncovered by my Tax Justice Network colleague John Christensen last week and revealed in the Observer today. As they put it:
The British government is attempting to torpedo a section of an international plan to eradicate tax evasion in a move that has sparked widespread condemnation.
The Observer has established that the UK is lobbying to remove paragraph 10 from the draft Doha Outcome Document. The document, which is scheduled to be ratified in November, is the most important element in the international process intended to help developing countries wean themselves off aid and establish sustainable economies.
The paragraph in question says this as currently drafted:
We will strengthen efforts to increase tax revenues through more effective tax collection and modernization of tax legislation including through simplification of the tax system, broadening of the tax base, and strongly combating tax evasion. To support individual country efforts in these areas, it will be important to enhance international cooperation in tax matters and broaden participation in the development of international tax norms and rules. We will consider strengthening the UN Committee of Experts on International Cooperation on Tax Matters by upgrading it to an intergovernmental body.
It would seem extraordinary that any government could object to the the first two sentences at any time, let alone right now. Given Gordon Brown's claimed commitment to Africa you would have thought he was promoting this clause. But no,. the Treasury is blocking the whole paragraph. It told the Observer:
The UK makes an active contribution to the existing UN tax committee. It is not clear that an upgrade to the existing committee ... would deliver any additional benefit.
Let's assume that was plausible for a moment. If so, why block the first two sentences?
Remember, this whole issue is about raising the cash needed to meet the Millennium Development Goals. This is about helping developing countries build sustainable tax systems. Giving them access to the information they need to ensure that the cash due to them by multinational companies in particular is paid. It's about ensuring that they are not abused by tax haven structures. It's about ensuring higher status is given to the UN tax committee, which is the only place where countries from outside the OECD (and that's most by far) get any say on international tax.
But the UK is saying no to all of that. It's saying these countries can't have a say. It's saying they can't have the information they need to collect tax, and that the status quo that leaves them exploited and aid dependent should be maintained. It's about saying cash should not be raised to fulfil the MDGs. It's about saying these countries should not be encouraged to build fair, open and accountable tax systems.
It's more pernicious still. In reality it's about saying that the UK's tax havens are more important than developing countries; that our multinationals should be allowed to continue their abuse of developing countries and that accountants, lawyers and bankers should still be allowed to set up the abusive offshore structures that facilitate the corruption that plagues these countries, because let me assure you - none of that corruption would happen without the assistance of those banks, lawyers and accountants.
This is about choice: choice about whether to support developing countries, choice about ending poverty, choice about fairness, choice about equal treatment, choice about respecting democracy. Or choice to support abuse, corruption, the maintenance of unlevel playing field in which developing countries are given no chance and have no hope.
We know where this decision was made. It was ,made in the Treasury.
And we know who to blame: Gordon Brown.
I'm left asking why he's done this?
Why now, of all times?
Why now when we could take the lead and create better regulation, which everyone says we need.
Why pick on developing countries?
Why choose now to send out the signal that the UK supports tax evasion, tax havens and tax abuse?
Why, Gordon, why?
It's very hard to find an answer.
It's just another reason for despair.
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Richard
A number of things are scary about this story. Firstly, the Treasury official who currently sits on the UN Tax Committee (in a personal capacity as an expert, rather than as a representative of the UK government) seems to consult no-one about his work on the committee, declines involvement with civil society organisations, and appears to be unaccountable to Ministers in respect of his activities on the Committee.
Second, several years attendance at the UN Tax Committee’s session in Geneva has taught me that the majority of “experts” appointed from OECD countries (and others representing sundry tax havens like Barbados and the Bahamas) are specialised solely in the field of bilateral tax treaty negotiations and have little knowledge of, or interest in, the wider subject of how improved tax regimes might contribute to the financing for development agenda. This is a typical case of technocrats being fielded to do a much bigger job than is within their capacity, and explains why civil society sees the strengthening of the composition of the Committee as an urgent priority.
Third, as you rightly note, the underlying issue here is that the UK government does not want to rectify the current faultlines in the system, because in the absence of international rules and norms for cooperation on tax matters British companies, the City and British related tax havens like Cayman, BVI, Bermuda, Jersey and Guernsey are able to cheat and game the system within relative impunity.
I wholly agree with your pinning a large part of the blame on Prime Minister Gordon Brown. The buck stops on his desk, and as shadow chancellor he made strong statements about tackling the culture of tax avoidance but subsequently as Chancellor did nothing in the international context to force the pace of change: in practice he stood by and watched as US Treasury Secretary Paul O’Neill pulled the plug on the OECD’s harmful tax practices initiative, and he appears to have acted in bad faith over the EU’s Savings Directive.
Britain makes great claims to wanting to help Africa become self-reliant. But these claims boil down to vile humbug. Tony Blair’s Africa Commission declined to address the issue of capital flight and tax evasion (“not the appropriate moment, dear boy” I was told in emollient Whitehall tones), and Gordon Brown now fails to support the modest proposals of the Doha Outcome Report. A plague on both of them.
John
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