The French and Germans have suggested that new sanctions against secrecy jurisdictions are now needed since they continue to facilitate abuse of the world’s financial architecture and undermine any prospect of effective regulation of that system. They are right to do so. These places represent a ‘get of regulation free card’ for the world’s banks, in particular. Their corporate clients exploit the same benefit with the assistance of their accountants and lawyers.

Such a request does however pose a particular set of problem. The first is how can we be sure we have properly identified these places, the second is how can we assess their significance and the third is how do we give them real opportunity to reform their ways?

The first and most important thing to say, as I have been doing quite a lot of late, is that tax cannot be the be all and end all of any definition. It was not tax that brought down the banks (although the aim of tax abuse may have contributed). It was lax regulation, a lack of transparency and the distrust this created between banks due to the opacity of their disclosure that nearly brought the world to its knees. All of that was massively influenced by the existence of, the use of and abuse of secrecy jurisdictions.

This means that the criteria that need to be set should not relate to tax alone, or maybe not even to tax at all. The criteria has relate to opacity. The Tax Justice Network is ahead of the curve on this issue: we have been working to identify the relative opacity of those places generally considered to be the major secrecy jurisdictions for a while now. It is slightly unfortunate that the crisis could not have been delayed by a few months so we could have finished our work to coincide with it, but that’s the way these things work.

What is very clear to us is that there remains an enormous wall of secrecy that prevents people obtaining the information they need if they are to trade with each other on a level playing field, with the risk of being apportioned on appropriate commercial basis. It is almost impossible to identify the owners of the most secrecy jurisdiction companies. Of course, that is also true of most Delaware companies, but we expect reform in places like the USA and the UK just as much as we do in Switzerland, Singapore and Cayman. The UK continues to recognise the role of trusts in tax abuse and is preventing the inclusion of these arrangements in the EU Savings Tax Directive. Trusts should, just as much as companies should, be completely open and accountable about their transactions: they are artificial structures created only by law. To take advantage of them requires transparency as the quid pro quo due to society for the advantage they provide.

Our definition of secrecy jurisdictions is dependent upon access transparent data about ownership, management, economic performance, and prospects of by law which confer economic advantage on those using them. This access cannot be restricted to tax authorities. That would have had no impact at all on the banking crisis. This is why signing tax information exchange agreements, as recommended by the OECD, is a wholly insufficient basis for defining those locations to be subject to sanction under any new arrangement.

What we need is data on public record, openly and freely available for anyone to access, meaning that Internet availability is essential.

This access can be assessed and ranked. An acceptable level of access can be determined. If it is then sanctions can be designed depending upon the degree of access that is provided. Anywhere would then know the action a must take to avoid those sanctions. This gives them an exit route that is meaningful and provides a benefit to society, unlike that which was offered in the 1998 OECD initiative.

I am not saying that this is the only plausible answer: that would be absurd. I am however say that to reproduce the errors of 1998 would be disastrous. I sincerely hope that we can avoid that mistake and adopt something along the lines we propose because it is objective, assessable, related to benefit and provides a meaningful exit root for those places that wish to reform. That would appear to be a successful design criteria.

That’s what Accountancy Age says might break out if Obama wins. And they note:

Tax campaigner Richard Murphy says there are some clear practical steps that could be taken to deal with havens, which are, after all, sovereign states and free to set up whatever tax rates they like.

‘Tax is not the issue,’ Murphy says, insisting that it is more a question of secrecy. He refers to havens rather as ‘secrecy jurisdictions’.

He says these jurisdictions have to provide better information sharing arrangements; the current ones being ineffective.

And if they don’t, larger countries could withhold tax at source.

Equally, companies who decide to situate intellectual property abroad putting a brand name in a company in the British Virgin Islands, for example, and getting UK-based companies to pay a fee to that company for the use of it could end up finding that fee is not tax deductible against their UK profits.

A better list of jurisdictions needs to be drawn up, and it is possible a UN tax committee, rather than the OECD, could take on responsibility for the issues.

Not only that, but the big countries may have to change some of their own rules to avoid charges of hypocrisy.