This fascinating report comes from Helsinki. I discussed the issue when there in June:
The Helsinki City Council on Wednesday debated a proposed strategy of global responsibility under which the city "considers it important to fight against tax havens and to avoid collaboration with companies with links to tax havens".
The City Board is to get a report by the end of February on ways to avoid collaborating with such companies. The City Board is also expected to study ways to ascertain if a company has links with tax havens.
The idea of the strategy of global responsibility is to promote equality and diversity in city acquisitions and in bids for tenders. Another aim is to raise consciousness among those responsible for city acquisitions on issues of human trafficking and the exploitation of foreign labour. The programme also commits Helsinki to target the grey economy and to fight climate change.
The proposals raised some controversy in the City Council. The programme was praised as necessary on the left side of the chamber, while some on the right were severely critical. The Helsinki City Council will vote on the strategy in its next meeting.
I rise the point for three reasons. First, I support the policy.
Second, this is an issue whose time is coming. As Simon Hughes noted during yesterday's House of Commons debate on tax havens and tax evasion:
Will [the Parliamentary Accounts Committee] ensure that no company that does business with the Government can use offshore tax havens in any part of its ownership arrangements? That is currently very common, particularly among public utilities such as water companies and others that supply key, nationally important infrastructure.
Third, and most important, the law to allow for decision making on this basis already exists and becomes effective next April. Now, who wants to trial it in the UK? I'm willing to help.
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Richard, great that you noted this. One thing that’s been discussed a lot here in Helsinki lately is the (im)possibility to turn this principle into practice within the present public procurement legislation that — according to the present interpretations of most experts — offers few tools to shut companies out of the bidding process unless they clearly violate tax laws. The way it now appears, the new EU procurement directive, which will most likely be finalised beginning of next year, will not change the situation in a substantial manner.
It is absolutely brilliant that Helsinki will start to chart the possibilities for economically responsible procurement (a similar assessment process is already underway in Malmö, Sweden, too) — and I’d like to believe that when there’s will there’ll also be a way — but given that the present legal framework gives the opposing camp such hefty ammunition, it’s also vital that this debate be taken to the EU and member state level and into the legislative process. The time to try and influence the EU directive is now.
Seems difficult to make work, what happens if a shareholder of one of these companies is based in a tax haven?
What happens if the company has shares bought by such a located new shareholder after a deal is signed?
I don’t see how you can limit who are the shareholders while being in the EU, it is basically protectionism….
Boots is a straight company, it is who owns it that is the problem…Oh and its debt of course!
Oh it works in France
The precedent is set
Is this substantially different from what’s happening at regional level in France – where I believe at least half a dozen regional assemblies have said they will not do business with banks who operate in tax havens?
Similar, I think
The way I understand it, what’s going on in France is a bit different. There are close to 20 regions that have called for more transparency, half of them having voted for a requirement for banks to provide country-by-country information. Since 2011 is the first fiscal year to which these demands apply, the banks should submit their figures to the regional authorities this autumn. It remains to be seen whether they comply or not.
The Helsinki City Council decided on the principle of “no cooperation with tax haven companies” a couple of years ago, but its remained a dead letter. Whats happening now is that the city commissions a study (DL next February) on the possibilities offered by existing laws to turn this principle into practice.