The following statement has been issued by Labour tonight and as I welcome the announcement in support of the full disclosure of beneficial ownership in tax havens I reproduce it in full:
Ed Miliband tonight warns the tax havens costing British families and businesses billions of pounds that they will have just six months to put their house in order and open their books - or face being placed on an international blacklist.
He will highlight figures showing that despite David Cameron boasting more than 18 months ago that he had forced tax havens to open up, not one of the tax havens linked to Britain as Overseas Territories or Crown Dependencies have yet delivered on Cameron's promise that they would publish a register showing who owns the companies registered there — and some have explicitly refused to do so.
The lack of leadership shown by the UK government has frustrated and slowed the pace of reform on tax avoidance across the world.
In a letter to heads of government, he will serve notice on them that that under the next Labour government they will have six months to publish publicly accessible central registers of beneficial ownership.
If they fail to meet this deadline, the next Labour government will withdraw the protection they get from international scrutiny and ask the Organisation for Economic Co-operation and Development to place them on its tax haven blacklist.
In an interview with the Guardian newspaper, Ed Miliband said:
“More than 18 months have passed since David Cameron promised to shine a light on the tax havens in UK overseas territories and Crown Dependencies — and their affairs are still shrouded in darkness. That may be good enough for him, but it will not satisfy me, or the incoming Labour government
“There is nothing pro-business about defending tax avoidance. The United Kingdom has a responsibility to open up the Overseas Territories and Crown Dependencies which are held responsible for so much tax secrecy and avoidance.
“And it is costing everyone who relies on our schools, our hospitals, our roads and our railways. It is costing everyone who pays their fair share of taxes, including millions of British businesses.
“Billions of pounds is being siphoned off into tax havens where our authorities cannot discover even the true ownership of firms registered there, let alone the scale of wealth hidden away.
“Today, I am putting these tax havens on notice that they will have just six months to open up their books or face international sanction.”
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Text of the letter from Ed Miliband, Leader of the Opposition, to heads of government in these Overseas Territories and Crown Dependencies:
Dear xxx
More than 18 months ago, David Cameron announced that you and he had reached agreement on increasing transparency around the ownership of companies based in your jurisdictions. This was to reduce the opportunity for them to be used for tax avoidance, evasion and other illegal activity.
He said that you and he would focus on beneficial ownership, and that you would publish the true owners of shell companies based in your jurisdictions. He claimed that this was a “very positive step forward” ahead of the G8 meeting in June 2013, and followed it up with a letter saying that
“Beneficial ownership and public access to a central register is key to improving the transparency of company ownership and vital to meeting the urgent challenges of illicit finance and tax evasion”.
However, since then no Overseas Territory or Crown Dependency has produced a publicly accessible central register of beneficial ownership. And, despite his initial enthusiasm, David Cameron has done nothing to ensure that they are produced.
Ahead of the General Election in May, I am writing to put you on notice that a Labour government will not allow this situation of delay and secrecy to continue. Labour will act on tax avoidance where the Tories will not.
All UK Overseas Territories or Crown Dependencies will have to produce a publicly accessible central register of beneficial ownership within six months of the election of a Labour government. If any Overseas Territory or Crown Dependency does not meet this deadline, we will ask the Organisation for Economic Co-operation and Development (OECD) to put them on the OECD's tax haven blacklist.
Yours sincerely,
Ed Miliband
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Well, if Mr. Miliband has knowledge of the text of this letter, it only confirms that he is not capable of being the statesman that he hopes to be.
Why?
One of the biggest confidence tricks played by the free market fundamentalists in the media, politics and economics is to paint every action like Miliband’s as wishful thinking and not at all probable.
We are spoon fed everyday by the media about how the markets are doing; how the economy is doing to the point where when someone like Miliband comes along and says something different or wants to change something then he or she is immediately vilified and portrayed as someone not to be taken seriously.
No doubt Richard Murphy has had a bucketful of this too. I honestly think that if the everyday success of the public sector and the social security system or NHS were portrayed on a daily basis to the nation like our wonderful markets were , people’s attitudes would change.
The current orthodoxy concerning economics is rotten to the core; if you kicked the door in the whole lot would fall down. I hope that Miliband at least tries to solve this problem and promotes it well – he might just succeed.
Nothing will change however if he does not try. And that is what has been missing in politics for a long time in this country.
Agreed
Trying is essential
Same old waffle.
We need offshore finance centres to introduce funds to mainland UK which would not normally be seen.
Offshore money is recycled onshore money relocated for illicit gain
Richard, what an extraordinary pair of statements from Rick and Jimmy. On what way does Ed Milliband’s quoted letter betray lack of statesmanship? Insufficient high-sounding statements of grand principle, perhaps? Cameron’s given us that by the truckload.
Jimmy’s comment gives us the mirror image, and says Milliband’s letter is waffle, so it’s presumably too Cameronian for him.
Actually, Ed’s letter is exactly the sort of letter hundreds of solicitors will have sent out yesterday, and will send out today: it’s a “Letter before Action”, sentvin hope that respondents to a court action will wake up, see sense and come to the negotiating table ahead of any need for expensive litigation. As such, it is pitched just right, and its recipients do indeed need to respond positively, for action will be taken, if Labour win; indeed I think it will, even if Labour do not win; for people are really waking up to the years-long rip-off -theft, to speak more precisely – that has been visited on them by tax-dodgers.
Agreed
You might like the objective, but Miliband’s threat really seems like nonsense.
He is basically saying we will tell the international community to put these dependencies on the blacklist of countries that don’t cooperate, despite the fact that they are cooperating as much as the rest of the international community (except the UK).
Would other countries would be willing to put these places on the list for failing to do something they don’t do themselves? It seems unlikely to me because it sets a precedent that means those other countries could be blacklisted as well.
Even if we assume other countries go along with this it appears to me that the UK Government would lose a judicial review of their actions.
We all know that the UK has ways to pressurise these places, but this just isn’t one of them and it makes Miliband look foolish.
The Kilbrandon Report said we could intervene
Empty rhetoric to get votes, and unfortunately some gullible voters will swallow it, along no doubt with a promise to Lower taxes and magically Raise public spending.
The guy’s an idiot.
I think you need to read my latest blog
You’re not quite as smugly safe in Guernsey as you think
Hopefully Milliband’s blacklist will be supported by a list of the damage tax evasion does to society and consumers will withdraw their own money and use of such services.
There’s nothing like a drop in profitability to make some of these businesses change their behaviour.
I hope that he goes through with it and also takes it further.
The 2008 crash may have opened people’s eyes as to the failings of modern capitalism, but the free market fundamentalists still want things their way.
“Today, I am putting these tax havens on notice that they will have just six months to open up their books or face international sanction.”
1. The nuclear option. The overseas territories don’t necessarily have to remain overseas territories. Independency is always an option. Especially as none of the OTs use sterling or BACS. If the trade-off for their survival in the global economy means independence, I’d like to see a British government of any political leaning resist that in 2015! If Cayman or BVI goes down the independence route, then Mr. Miliband has about as much influence over them as he does over Singapore or Hong Kong. And is the tax haven problem solved? No.
2. In the UK, politically, there is no left or right on this. It’s a momentum that has been building up since the mid 1990s. And the UK has taken a relatively consistent stance throughout the 1997-2010 Labour government and the current coalition. It’s been about tightening the screws on all tax haven countries – including British territories/dependences and tax haven ‘preferential tax regimes’ in OECD countries too. To my understanding, from the British point of view, it’s been about managing to find the balance between tightening the screws on all tax havens without tightening the screws on UK territories/dependencies more tightly than other countries.
I maintain that the text of the letter that Mr. Miliband has allegedly sent to the OTs and CDs is at best, a bit of a schoolboy error and not statesman like, and at worst, damaging to the very outcome that Mr. Miiiband – and myself to that matter- would like to achieve. However, for domestic political purposes, it’s great: ‘…the Tories promised to do this on tax havens and they haven’t and we’ll do more if you’ll vote Labour’.
Of course Cayman could laeve
But without access to the UK legal system no one would use it
The place is not able to deliver stability for finance itself
It would be economic suicide to do so
In the same way that no one uses Singapore or Hong Kong (or indeed Switzerland or Liechtenstein) due to their unstable legal regime?
If Cayman or BVI went independent, there is little doubt that they would continue to use the common law, as have many other states now independent of the UK, and (if they wished) final appeals to the Privy Council.
But there are no doubt good reasons why they might like to avoid full independence.
All that said, the Overseas Territories have been stalling on this issue – obviously none of them wants to go first, for fear of losing a competitive advantage – so it is good that it is receiving some attention. In a post-FACTA, post-CRS world, it is about time for people to realise that the days of banking secrecy (and shareholder secrecy) are over.