The political dimension of the report by major NGOs that the tax havens amongst the UK's Overseas Territories are not doing enough to tackle corruption that the secrecy they legally tolerate permits is brought into sharp focus by this report in the Financial Times this morning:
David Cameron has been urged to intensify efforts to prise open offshore companies by campaigners who say the resistance of Britain's overseas territories to his transparency drive is a “national embarrassment”.
But Westminster's latest demands have been flatly rejected by the Cayman Islands, which said last week that no country in the world gave unfettered access to the information Britain was asking for.
According to the FT:
Alden McLaughlin, the premier of the Cayman Islands, told its legislative assembly on November 26 that he had turned down the latest request of the UK government to give law enforcement agencies direct access to beneficial ownership information. “To do otherwise would place the Cayman Islands at a competitive disadvantage with other jurisdictions that do not permit unfettered access to beneficial ownership,” he said.
So, there is a stand off: commitments made to the UK government are not going to be honoured because the race to the bottom in regulatory abuse is too important, and feeding the demand from international crime is too lucrative.
I get the feeling we are coming to crunch time on the issues surrounding tax justice. I wrote yesterday on how this appears to be happening in the case of country-by-country reporting, where the US is the front line.
Now it appears that the past warm words on tax haven reform are now disappearing as we reach the point where reality is biting and the kick-back (I choose my words carefully) has begun.
Both battles need to be won or all the words and actions of the last few years are meaningless and unfettered tax abuse will continue.
And let's have no doubt what this is about: this fight is about saving markets from the abuse that will destroy them and any concept of economic freedom. This is not about asserting grand libertarian ideals, this is about ending the corruption that follows from the unlevel playing fields tax havens create and which will destroy any free-market concept from within.
I have argued for more than a decade that the tax justice movement may be the most pro-fair market movement there is in the world because only by delivery of openness and transparency can market logic survive as the mechanism to allocate capital for best use in society. It's time for all those who believe that markets have a role to play in society to stand up to the abuse promoted by places like Cayman and say just that. Or markets may be destroyed from within.
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Should we perhaps send a gunboat? Can we remove any preferential status or advantages these jurisdictions have by being UK related? What are the problems with revoking any privileges accorded to the Isle of Man or the Channel Islands?
I personally think we legislate for them since these are foreign affairs issues and we have unambiguous responsibility for their foreign affairs
I have also long argued – to the complete bemusement of my North London Constituency Labour Party at the time of the Clause 4 debate and consultation (and truth to tell, I encountered similar bemusement even in the much more sophisticated environment of the NEC of the Christian Socialist Movement) – that the “free market”, properly understood, is a Socialist instrument/concept, and that the Left was MAD to let the Right capture and “own” the free market concept.
How do I argue this? Because the true “free market” is one in which the Socialist principle of “equality of bargaining power” (or “equality of arms”, in any litigation, which should see a judge intervening on behalf of a litigant in person, to preserve “equality of arms”), and that, where such equality of bargaining power does not exist, governments must intervene to create that equality.
By surrendering the “free market” to the Right, we allowed them to call “the stitched-up market” free, whereas for the Left, the only truly “free” market is a “fair market”, which is what the Tax Justice movement has always sought to achieve, and the failure to achieve which will indeed result in the disappearance of anything resembling a true market. For the only choice will be “Take it, or leave it! “
Spot on
On a lesser (?) issue, we are now allowing Osbourne to redefine a living wage – at our future peril I think.
Could not agree with you more. Tax havens also expose the lies of finance theory and its gods who still believe markets are free and fair. At some point these icons and their sham covered up by famous institutions in academia need to be fully exposed. The documentary Inside Job started on this but I guess ordinary people have little access to the language of experts and experts collude and bully critics in the academy with their power and editorial control.
Herein lies the heart of the problem. There is a fundamental problem with allowing competition into many aspects of life – tax being just one good example.
“To do otherwise would place the Cayman Islands at a competitive disadvantage with other jurisdictions that do not permit unfettered access to beneficial ownership,”
Well done for raising this issue. It’s high time it made its way onto the political agenda of all political parties.
What’s wrong with the argument that the residents of Gibralter, the Channel Islands, etc can stay British if the same laws , including tax laws, apply there – just as anywhere else in the UK? That means paying 20% VAT for a start!
As for those 99% votes to remain British, the residents of the IOW might well vote to be Spanish if they were excused VAT and income tax!