OECD should step aside and let UN tackle tax havens say Tax Justice Network and Action Aid

 Financial Secrecy Index, OECD, Secrecy jurisdictions, Tax Havens, Tax Justice Network  9 Responses »
Nov 012011
 
Last week  the OECD’s tax boss Pascal Saint-Aman’s made comments in the International Tax Review criticising the Tax Justice Network’s Financial Secrecy Index. These are the published replies from Action Aid’s Martin Hearson and TJN director John Christensen.

 

Martin responded to Saint-Aman’s comments about transfer pricing – in which he suggests that the OECD’s approach to transfer pricing is wrongly criticised – and John defends TJN’s Financial Secrecy Index from accusations that it was rigged to ensure that countries we wanted on top of the list “be on top of the list”.

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The OECD does not have all the answers
27 October 2011

Responding to Pascal Saint-Amans’s comments in an exclusive interview with International Tax Review, Martin Hearson, policy adviser at ActionAid, argues that the OECD does not have all the answers in the formulation of international tax standards.

In an interview with International Tax Review, Pascal Saint-Amans suggests that the OECD’s approach to transfer pricing is “disputed and sometimes contested by people who don’t really get it right”. We welcome the appointment of Pascal, who has always made an effort to reach out to civil society organisations, to the OECD’s top position at a time when tax and development is rising up the global agenda. But his comments somewhat mischaracterise an important debate.

Development NGOs such as ActionAid have invested a lot of time in engaging with tax officials from developing countries. We understand that building transfer pricing capacity is the immediate priority, especially in Africa; we also appreciate that many countries will prefer to do this on the basis of the OECD guidelines, because they are currently the pre-eminent international standards. But we also know that we are not the only ones to question the guidelines’ long-term suitability for developing countries.

First, it is important to recognise that transfer pricing, the arm’s length principle and the OECD guidelines are three different things. The OECD standards propose several ways to determine the arm’s length price (ALP), and represent one approach to transfer pricing. But the OECD does not have a monopoly on transfer pricing or the ALP – just ask the Brazilians.

It is perfectly possible to believe in transfer pricing, and indeed in the ALP, but to think that the OECD guidelines may need to be adapted to the resource-constrained context of an African revenue authority. This is one of the issues with which the UN Committee of Experts is grappling in the drafting of its practical manual on transfer pricing. I have heard strong support for this perspective from many African quarters, along with an insistence that the adoption of transfer pricing standards is a matter of national tax policy, to be made by each state itself.

Second, it is not the OECD’s role to reconcile the interests of OECD members and of developing countries. The existence of two model tax conventions – maintained separately by the UN and OECD – is an acknowledgement that these interests do not always coincide. The OECD’s report on attribution of profits to permanent establishments is frequently singled out by African revenue officials as an example of a step too far away from the taxing rights of source countries, and has been rejected in the recent update of the UN model convention for precisely this reason. My impression is that many also question whether, in the longer term, a similar balancing might not be necessary with regards to transfer pricing standards.

As should already be clear, the characterisation of the transfer pricing debate as between those who favour OECD standards and those who advocate formulary apportionment overlooks much of the current discussion. But Pascal’s advice to developing countries to “be cautious about the white man” who advocates formulary apportionment is also wide of the mark. I recently attended a meeting at the OECD on transfer pricing capacity building, at which only one person brought up the topic of formulary apportionment. It was not a white man, or indeed an NGO participant, but a woman from an African tax authority.

There is much important work to do on tax and development, and I consider the OECD secretariat an important partner which is already doing a lot of good work. For NGOs, however, the long-term objective is for developing countries to participate, on an equal footing, in the formulation of international tax standards. The first step towards this is to admit that the OECD does not have all the answers.

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OECD should step aside and let UN tackle tax havens
31 October 2011

In response to Pascal Saint-Amans’s comments in an exclusive interview with International Tax Review, John Christensen, director of the Tax Justice Network, defends the Financial Secrecy Index and argues that the OECD is unsuitable to lead global attempts to tackle offshore secrecy.

The OECD’s Pascal Saint-Amans cannot go unchallenged when he asserts, in aninterview with International Tax Review, that the Tax Justice Network created its 2011 Financial Secrecy Index (FSI) “with a mathematical formula to get countries they want on top of the list to be on top of the list”. If Saint-Amans has evidence to support this extraordinary attack on the integrity of the FSI he should provide it; if not he should withdraw his comment and apologise to those concerned, myself included since I was responsible for the overall direction of research for the 2011 FSI.

The FSI is based on 15 indicators which were applied in exactly the same way to all 73 countries assessed in the 2011 FSI. Readers wanting to explore the background to these indicators can access our explanatory notes.: They can judge for themselves whether these indicators are biased towards unspecified countries we want “to be on top of the list”.

Readers can also judge for themselves whether the mathematical formula we used in 2011 is biased towards one country or another. When we evaluated the results of the 2009 index we were told that the formula used that year did not put sufficient emphasis on the secrecy score arising from our assessment of the 15 indicators. This had the outcome of elevating larger offshore financial centres higher up the ranking relative to the more secretive jurisdictions.

This year we rectified this by adjusting the mathematical formula used for combining the secrecy scores with the scale weightings to emphasise secrecy over scale. Readers can access the detailed methodology on the FSI website. Saint-Amans implies that we have an unrevealed agenda for getting countries we “want on top of the list to be on top of the list”. I would ask him to expand on the political agenda he accuses us of pursuing. From our perspective, we designed the index in 2007 precisely to overcome the deficiencies of the OECD’s 2000 list which omitted many of the world’s largest secrecy jurisdictions, including OECD member states like Austria, Luxembourg, Switzerland, UK and USA.

Not surprisingly the 2000 OECD list was widely condemned. To compound their earlier error, in 2009 the OECD published a black/grey/white list of secrecy jurisdictions based only on their hopelessly inadequate tax information exchange agreement (TIEA) criteria. Mere commitment to cooperate was sufficient to secure removal from the black list, and simply signing up to 12 TIEAs on the OECD ‘upon request’ model was sufficient to secure a white listing. Hey presto, almost every secrecy jurisdiction is now white listed and the OECD claims victory in the battle against tax havenry.

Sadly, the OECD claims are greatly exaggerated. The effectiveness of the TIEAs cannot be assessed since the OECD has not published data on how much information is actually being exchanged. Where information does exist, it appears that very little data is being exchanged under the TIEA process. Worse, despite the claims made by Saint-Amans, banking secrecy remains operationally intact. Do not take my word for it; take this from the horse’s mouth:

“The Swiss Bankers Association (SBA) welcomes the finalisation of the tax agreement between Switzerland and the United Kingdom. Overall, the agreement is comparable to the one concluded with Germany. Firstly, the bilateral treaty gives clients of banks in Switzerland who are taxable in the United Kingdom a path to tax compliance while maintaining their financial privacy.”

Financial privacy in this context is banking code for secrecy.

Time and again, the OECD has demonstrated its unsuitability to lead global attempts to tackle offshore secrecy. It is a rich countries’ club whose members feature prominently on the 2011 FSI ranking. The policy prescriptions it promotes are either ineffective (. the ‘upon request’ TIEAs), or impossibly complex and unsuited to the needs of non-OECD countries ( the ‘arms-length’ approach to transfer pricing).

The OECD is not the appropriate organisation to carry forward global attempts to tackle offshore secrecy. Lacking both legitimacy and political will, it should stand aside and allow a suitably politically upgraded UN Committee of Experts on International Cooperation on Tax Matters to take over responsibility for carrying forward the vital agenda of ending tax havenry.

 Posted by Richard Murphy at 10:13 am

UK the top secrecy jurisdiction

 Financial Secrecy Index, Secrecy jurisdictions, Tax Havens, Tax Justice Network, Uncategorized  10 Responses »
Oct 182011
 

Tax Journal has just published a lengthy article on the Tax Justice Network’s Financial Secrecy Index which opens with the following sentence:

The United Kingdom would ‘easily’ take Switzerland’s place at number one in the Financial Secrecy Index if the ‘British network of secrecy jurisdictions’ were considered.

This is absolutely correct. The City of London is intimately connected to offshore satellites in Bermuda, British Virgin Islands, Cayman and Jersey (all of which fall in the top ten of the FSI), and if all the Crown Dependencies (CDs) and British Overseas Territories (BOTs) were combined with the UK as a single entity, there is no doubt that the UK would top the list. As Tax Journal notes:

Ten secrecy jurisdictions on [the TJN’s list of 73 jurisdictions] are either British Crown Dependencies (such as Jersey) or British Overseas Territories (such as the Cayman Islands or Bermuda) while many others are members of the British Commonwealth.

These jurisdictions generally share British common law [and] deep financial penetration by British financial interests, typically use British-styled offshore structures such as trusts, usually have English as a first or second language, and mostly have their final court of appeal in London.

Here is the full list of CDs and BOTs with their [secrecy scores] and global scale weights

Guernsey [65] 0.00298
Isle of Man [65] 0.00060
Jersey [78] 0.00374
Anguilla [79] 0.00000
Bermuda [85] 0.00066
BVI [81] 0.00150
Cayman [77] 0.04622
Gibraltar [78] 0.00005
Montserrat [86] 0.00000
Turks & Caicos [90] 0.00003

Look first at the secrecy scores. They range between 65 (Guernsey and Isle of Man) to 90 (Turks & Caicos). While the average secrecy score comes out at a very poor 78, the appalling scores for Bermuda, Montserrat and Turks & Caicos demonstrate that when it comes to hiding away the truly nasty stuff, British bankers and lawyers are spoilt for choice in terms of what they can offer their dodgy clients.

Now let’s turn to the issue of scale. London is already a giant in the offshore financial services market. The IMF data we used for the 2011 Financial Secrecy Index showed London as having 20 percent of global market share. Now add the estimated combined market shares of the CDs/BOTs and the aggregated figure rises to around 33 percent. One third of the global market in offshore financial services – and that doesn’t include British Commonwealth countries which also feed cross border financial flows through to London.

Now at this stage we have a dilemma: should the Tax Justice Network take the UK secrecy score (45), or should it work on the basis that London can use its offshore satellites to do the monkey business (viz Bermuda: secrecy score 85) while maintaining the pretence of being reasonably transparent and cooperative? If the former, London’s position on the overall ranking scarcely shifts, but if the latter, which reflects reality, then London screams ahead of the pack to number one position.

TJN’s general position when assessing secrecy scores is to assess on the basis of the lowest common denominator position. If British lawyers and bankers can use jurisdictions like Bermuda, Cayman, Jersey and Montserrat (average secrecy score = 81) to hide their dirty business from UK investigators, then that’s exactly what they’ll do. And experience shows this to be what happens.

Meantime, successive British governments connive with the City of London in arguing that these are independent statelets with internal autonomy when it comes to setting tax rates. This argument is at best disingenuous, at worst outright mendacious. When it comes to creating secrecy mechanisms, through trusts and company laws, for example, or through cooperation in international international tax information exchange processes, the British government has complete control. As TJN director, John Christensen, notes in the Tax Journal article:


“‘No law is passed in Jersey without the approval of the Privy Council,’ he told Tax Journal, adding that key Jersey officials are appointed by the British monarch.”

So TJN now needs to consider its position on how to treat what we call the British Empire of Tax Havens. Does it  continue as present and rank them separately; or should we aggregate them into a single spider’s web of interlinked financial services serving the political and economic agenda of the City of London? If you have a view on this, please drop us a line at info at taxjustice.net

And finally, the sharp-eyed among you will have noted that the common feature of the stamps illustrating this blog is Her Majesty, the Queen of England. Not long ago, HM Queen asked why no economists had seen the 2007/8 financial crisis before it hit. Of course, some of us had foreseen it, but more pertinently, some of us had also seen how secrecy jurisdictions have contributed to increased inequality, fiscal crisis, financial market instability, corruption, and a whole host of other plagues and miseries. And with due respect to Her Majesty, too many of these places carry her head on their postage stamps. We strongly recommend that she asks Santa Claus for a copy of Treasure Islands: Tax Havens and the Men Who Stole the World in her Xmas stocking this year.

NB: adapted from TJN blog with permission

 Posted by Richard Murphy at 2:40 pm

Cayman feels the heat of Tax Justice

 Cayman, Financial Secrecy Index, Tax Justice Network, Uncategorized  3 Responses »
Oct 112011
 

Cayman News Service has reported:

Former Cayman Islands Monetary Authority chairman, Tim Ridley, believes that Cayman’s public and private sectors ought to be doing much more to defend Cayman’s stance globally, with nothing less than the islands’ financial services industry at stake. Ridley says that the recent report by the Tax Justice Network reveals a continuous need for Cayman to keep presenting what he says is the accurate position about the local financial services industry.  The former CIMA boss said that although efforts are made, they have been “sporadic” and reactive, not proactive as it needs to be.

“The recent highly subjective and somewhat ‘short on substance’ secrecy report by the Tax Justice Network underscores how essential it is that Cayman presents the accurate position whenever and wherever possible and to those that matter,” he said.

Although Ridley concedes that the Cayman Islands Government and the private sector do, for the most part, appreciate the importance of defending Cayman’s position abroad, he called the actual development and implementation of coherent strategic plans “sporadic” and “reactive rather than proactive.” Both the government and the private sector need to up their respective games, he said, by devoting significantly more time and resources to meet these challenges.

“Those who would bury places like Cayman are in deadly earnest,” Ridley said. “So the very future of the financial services industry in Cayman is at stake.”

Tim is right: we’re in deadly earnest.

It’s nice of him to acknowledge we’re also winning.

The TJN report on Cayman is here.

 Posted by Richard Murphy at 8:01 am

Has the Isle of Man fallen in love with the Tax Justice Network?

 Financial Secrecy Index, Isle of Man, Tax Justice Network  1 Response »
Oct 072011
 

Some secrecy jurisdictions have got very upset with the Tax Justice Network about its new Financial Secrecy Index. Jersey, Luxembourg, Cayman and the UK are amongst those getting stroppy, but then they ranked highly. The universal reaction on their part? We got it wrong.

So now let’s note the reaction from a secrecy jurisdiction that saw its ranking improve quite a lot. That was the Isle of Man. Isle of Man today has said:

It’s been among the fiercest of critics of the Isle of Man as an offshore finance centre – branding us a ‘tax haven’ and ‘secrecy jurisdiction’.

But now even the Tax Justice Network has acknowledged the work the island has done in increasing financial transparency.

Tax Justice Network had produced its latest ‘Financial Secrecy Index’ which shows the Isle of Man well down the list at number 36 behind such mainstream onshore countries as Italy, Ireland, Canada, India, Austria, UK, Germany and the USA. Of our Crown Dependency rivals, Jersey comes in at seventh on the list and Guernsey at 21.

The previous Financial Secrecy index was published in 2009 when the Isle of Man was placed at 24th on the list with an ‘opacity score’ of 83.

This time the secrecy score has been reduced to 65.

Tax Justice Network adviser Richard Murphy, who was heavily involved in the construction of the index in 2009, said in his blog that the Isle of Man and Guernsey both got credit for increasing transparency.

So let’s get this clear: we get this right if you go down the ranking and we get it wrong if we go up.

I think the conclusion is obvious: of course we get this right. It’s just some do not like the answers. Being named as the facilitators of crime is I guess always going to be uncomfortable for a place. But let me assure those who don’t like it: we’re going to carry on doing it.

 Posted by Richard Murphy at 9:53 am

I think I’ve upset Cayman. My crime today? Living in a modest house

 Cayman, Financial Secrecy Index, Secrecy jurisdictions, Tax Havens, Tax Justice Network, Uncategorized  12 Responses »
Oct 062011
 

The Cayman Islands official news service hasn’t taken kindly to Cayman being ranked at number 2 in the new Tax Justice Network Financial Secrecy Index. They said so almost as soon as the report came out but now they’ve pretty much lost it, so deep is their anger at being given credit for what they do so well, which is to sell secrecy.

Rather weirdly, they’ve made me the villain of the whole piece. I say weirdly for good reason: as I’ve made clear, whilst I was heavily engaged in producing the first Index this time I only acted as an adviser, but heaven forbid things like facts should get in Cayman’s way when the true nature of what they do has been rumbled. The whole Cayman report is worth a read for its amusement value, but let me just highlight some of it here:

The chair of Cayman Finance and the organisation’s representative in London have both dismissed the findings of the Financial Secrecy Index published in the UK capital on Tuesday by the Tax Justice Network and Christian Aid. Richard Coles and Jack Irvine both claim that the authors of the report are advocates of global taxation, once referred to by the former Cayman Finance Chair as the ‘Tax Taliban’ who are not taken seriously. Within some 36 hours of its publication the report and its finding that Cayman was the second most secret financial jurisdiction in the world and played a key part in the global financial crises was posted on websites of more than 70 different international news houses and media organisaitons.

That last part is true. But as they say:

“It beggars belief that the Tax Justice Network still produces these canards about The Cayman Islands,” Richard Coles said in the wake of the report’s publication. “We have never been more transparent and we have never had so many tax treaties with other jurisdictions. What is deeply worrying is that some sections of the UK media take Messrs Murphy and Christensen seriously. These men are high taxation zealots and like the OECD they see nothing immoral in governments taking half or more of a man’s salary,” Coles said, adding that they would not be happy until there was a universal global tax rate.

Which is an intriguing association on Coles’ part: much of the criticism in the report is aimed at the OECD. Maybe he hasn’t read it?

But the fun then really starts:

Jack Irvine, the London based advisor to Cayman Finance’s who liaises on their behalf with HM Government, the media and Cayman’s London office … described the secrecy index report as the “same tired old song” that he said the Tax Justice Network have been turning out for years. “

There are a few facts that your readers should appreciate about this rather grand sounding organization,” Irvine told CNS. “In fact it is a tiny little outfit run out of Richard’s Murphy’s modest house in the English countryside.

Well, it’s true Jack I live in what some would call a modest house in the English countryside – and I’m very happy to do so. It suits me and my family just fine. Modest it may be in Jack’s view, but I have no desire to move. But two questions arise. First, why has he got his facts so wrong, and secondly, so what?

For his information, I haven’t been an officer of the Tax Justice Network for several years, nor even paid by it for some time. I certainly advise it and work closely with John Christensen, its director, but the international network, spread over many countries now is run by John, not me. So it looks like Jack Irvine has failed to get his due diligence right.

But even if true – the question is, so what? Does it matter that I mainly work from home? Does that make a  difference to the result? I mean, surely better I say I work from home where I actually am than claim I’m based in a slot in a filing cabinet in a lawyer’s office on Cayman just to avoid or evade tax and to hide what I do from view, wouldn’t you say Jack, just to bring things down to earth somewhere new Georgetown?

Well apparently it does matter, for  as Irvine continues, this means:

Nobody in the financial world takes Mr Murphy seriously. He is an advocate of punitive taxation and he would like all countries to have a common tax system. This is not a man who appreciates individuality when it comes to governments.”

That’s pretty odd. The financial secrecy index isn’t about tax rates. They just don’t feature Jack. The clue is in the title. Nor have I advocated punitive tax. And what a common tax system is baffles me: by definition even within the EU such things don’t exist. I wonder what he means?

Irvine hasn’t finished yet though:

The TJN is actually an alliance of a number of individuals and non-aligned coalition of researchers and activists with a common interest in what they believe are the harmful impacts of tax avoidance, tax competition and tax havens. Murphy is just one of the individuals who blogs regularly on the subject.

He’s got something right. I blog regularly. I accept that!

By this point even Cayman News Service was getting a little weary of Irvine’s rant. Even they noted:

The secrecy index which was published on Tuesday which ranked Cayman as the world’s second most secret jurisdiction was written and researched by seven people including John Christensen who is the director of the Tax Justice Network International Secretariat.

But Irvine had not finished:

Irvine said that Murphy has the support of what he described as “politically motivated charities” such as Christian Aid and Oxfam, which others would describe as one of the largest and most respected charitable organizations in the world. But he said it was Murphy that was forever “claiming that tax neutral administrations such as Cayman, BVI or Jersey are responsible for the deaths of children in the developing world, in particular Africa.”

He said there will always be sections of the British media who would “dance to Mr Murphy’s tune” and went on to say that it was “no surprise that the left wing Guardian is always willing to repeat Mr Murphy’s tirades without question or attempting any balance.”

My guess is that this is said to support Irvine’s case that I’m not taken seriously? It’s  a compelling case you make Jack based on this evidence. The trouble for him is that Cayman News added:

However, Irvine didn’t comment on the stories run by the Daily Telegraph, known as a more politically right wing daily newspaper, or those in other more neutral news houses such as Reuters and Bloomberg.

Why not Jack? Being a little selective in your take, maybe? No, not at all, he claimed:

Irvine said: “The Cayman Islands should be comforted by the fact that the UK government takes no notice whatsoever of either the Tax Justice Network nor The Guardian’s regurgitation of their fantasies and indeed the current UK regime and the House of Commons All Party Parliamentary Group have repeatedly signalled their support of Cayman and its robust financial and legal systems.”

Ah, that’s all right then. The current ‘regime’ in the UK is on Cayman’s side. So life’s all right then.

Why the tirade then Jack? Could it be you’ve got something to hide? And maybe, just maybe you don’t like a few honest people pointing it out?

Either way, thanks for taking it seriously. I appreciate that. Oh, and send a signed picture. I’ll put it on the wall of the room where I work. I can’t call it an office by the way – I share it with my sons’ model railway.

Which I guess proves Jack’s right though. I really am a lightweight cheapskate who can’t even get a slot in a filing cabinet all of my own.

 Posted by Richard Murphy at 5:54 am

Jersey flips its lid

 Financial Secrecy Index, Jersey, Tax Justice Network  3 Responses »
Oct 052011
 

Jersey has, according to the Daily Telegraph, not taken kindly to the Tax Justice Network Financial Secrecy Index, in which it came seventh. As they report:

The CEO of Jersey Finance has criticised the 2011 Financial Secrecy Index, in which Jersey ranks seventh, as ‘nonsensical’ and nothing more than ‘lobbying disguised as research’.

Geoff Cook added:

The report is presented as though it is based on accepted international standards. The reality is that it is a selective interpretation of subjective information designed to further the Tax Justice Network’s specific agenda.

Sure it is Geoff: why should we use someone else’s when we’re more than capable of creating our own.

But Geoff doesn’t get that point. He added:

Jersey’s ranking in the Index is nonsensical. Jersey is one of the safest and best regulated international finance centres (IFC), as demonstrated by credible, independent assessments by internationally accepted organisations like the OECD and the IMF.

But we criticise the OECD, and rightly so: it’s laughable that having 12 tax information exchange agreements makes you compliant in their eyes. So we point out the weakness in their agenda, which was to exonerate these places far too easily for giving a sop to the OECD.

Although we’d also agree with them on one issue – Jersey has almost no experience of information exchange which is exactly why we say it’s secretive.

But let’s see just how daft Cook’s opinion is. As the Telegraph notes:

The new index contradicts the findings from last week’s Global Financial Centres Index, which ranked Jersey as the world’s top offshore finance centre according to how it performed against its competitors and how it is rated by financial services professionals.

So by using a simple rule of thumb - asking a select group of people who are looking for secrecy on behalf of their clients – Jersey comes out top and Jersey is proud of the fact but when we point out t comes on top with these people because it sells the what they want – which is secrecy – we’re told we’ve got everything wrong.

You can’t have it both ways Geoff. We’re either right that you’re secretive or the Global Financial Centres Index is right that you’re really secretive. But whichever way you spin it Geoff we’re still right.

And you’re wrong.

Now admit what it is you sell (because, let’s be candid Jersey has nothing to offer London hasn’t but secrecy and tax abuse) and stop wasting journalists time with your false cries of protest which no one believes.

 Posted by Richard Murphy at 11:57 am

London is the consolidated #1 secrecy jurisdiction in the world

 Cayman, City of London, Financial Secrecy Index, Guernsey, HMRC, Isle of Man, Jersey, Secrecy jurisdictions, Tax Havens, Tax Justice Network, Uncategorized  11 Responses »
Oct 042011
 

London features heavily in the Tax Justice Network’s new Financial Secrecy Index. Whilst the UK comes in at number 13 places for which the UK is wholly responsible also feature prominently on the Index. The overall scores for London and its satellite offices are:

RANK Secrecy Jurisdiction FSI – Value Secrecy Score Global Scale Weight
2 Cayman Islands 1646.7 77 0.046
7 Jersey 750.1 78 0.004
11 British Virgin Islands 617.9 81 0.002
12 Bermuda 539.9 85 0.001
13 United Kingdom 516.5 45 0.200
21 Guernsey 402.3 65 0.003
36 Isle of Man 230.4 65 0.001
38 Turks & Caicos Islands 218.9 90 0.000
43 Gibraltar 174.6 78 0.000
65 Anguilla 36.0 79 0.000

Pu that lot together – and that’s the fair treatment of them since ministers in the UK and these places always say their value is as conduits to the City – and London is number 1 secrecy jurisdiction in the world.

But the Treasury denies it of course. As the Guardian notes:

The UK, with the City of London and a network of overseas tax haven territories and dependencies including Jersey, Bermuda, the British Virgin Islands and the Caymans, also features prominently in the index’s dirty dozen of top offenders.

The UK Treasury said it did not recognise the picture presented in the index, adding that the UK government had demonstrated a clear commitment to tackling all forms of tax avoidance and evasion.

And as it added:

A spokesman for the Treasury defended the UK record on tax havens, saying: “At the budget this year we published Tackling Tax Avoidance, on tackling avoidance at the root. The Global Forum on Tax Transparency set up by the G20 in 2009 now has over 100 participating jurisdictions and over 600 bilateral tax information exchange agreements have been signed. The world has changed over the past three years and continues to do so, and the government is committed to keep up momentum.”

Respectfully, that’s nonsense. The document in question is a weak re-hash of what was already being done: the one thing it actually made clear was that nothing had changed at all. And much of secrecy jurisdiction activity is evasion anyway.

As for those bilateral tax information exchange agreements: as the Guardian TJN notes saying:

The problem with many of the new tax information agreements, according to TJN, is that they have taken the weakest form possible, in effect requiring tax authorities to know what they are looking for before they ask for information, rather than requiring full disclosure.

Precisely so. And that’s a choice on the part of the UK and others: a smokescreen to hide what’s really happening – as the Treasury and tax authorities  well know.

Indeed, as Dave Hartnett once said to me, he thought he had to sign the deal he did with Liechtenstein because the a standard OECD style tax information exchange agreement would never have produced any data at all, and on this occasion he was right – which is exactly why the Treasury know that what they’re saying is wrong and deliberately wrong.

So for those looking to tackle tax havens in the UK the problem is near at hand – and focused in London EC3.

 Posted by Richard Murphy at 8:55 am

The 2011 Financial Secrecy Index top slot goes to Switzerland

 Financial Secrecy Index, Secrecy jurisdictions, Switzerland, Tax Havens, Tax Justice Network  Comments Off
Oct 042011
 

The top slot in the 2011 Financial Secrecy Index goes to Switzerland – now considered the most abusive secrecy jurisdiction in the world as a result. There is good reason for that. As the Tax Justice Network says:

Since the financial crisis emerged, Switzerland’s share of the global market in offshore financial services has increased, as a result of its role as a safe haven.Although Switzerland has signed a number of OECD-style information exchange agreements, which have allowed a limited penetration of Switzerland’s fabled bank secrecy, we consider these operationally ineffective, so they have only a limited impact on our ranking (what is more, many other jurisdictions competing with Switzerland in our rankings have signed significant numbers of information-exchange agreements too.)

Switzerland also continues to resist automatic information exchange — the effective kind – and its widespread involvement in the administration and use of trusts, foundations and offshore companies remain a major barrier to tackling tax evasion and illicit financial flows.

In partnership with Luxembourg in particular, Switzerland has fought hard against efforts by the European Union to expand automatic information exchange and tighten up on tax collections, preferring to play a divide-and-rule game by signing individual deals with powerful EU players countries such as Germany and the United Kingdom.

Swiss banks have also sought to mitigate the limited efforts of crackdowns elsewhere – notably by the United States – by increasing their efforts to attract illicit flows from developing countries, to make up a supposed ‘shortfall,’ and by increasing their activity in Asian centres such as Singapore and Hong Kong, where there is perceived to be less ‘heat.’

Switzerland remains a major, active and interventionist impediment to global financial transparency, and despite some recent timid improvements it fully deserves its position at the top of our ranking.

See TJN’s full report on Switzerland here.

 Posted by Richard Murphy at 7:05 am

This is one view of the world’s top financial centres – but a better one is coming soon

 Financial Secrecy Index, Tax Justice Network, Uncategorized  1 Response »
Sep 262011
 

Today the Z/Yen Group publishesdthe tenth Global Financial Centres Index (GFCI 10) covering 75 financial centres. The GFCI Top 10 were:

Centre GFCI 10 Rank GFCI 10 Rating GFCI 9 Rank GFCI 9 Rating Change in Rank Change in Rating
London 1 774 1 775 0 -1
New York 2 773 2 769 0 4
Hong Kong 3 770 3 759 0 11
Singapore 4 735 4 722 0 13
Shanghai 5 724 5 694 0 30
Tokyo 6 695 5 694 -1 1
Chicago 7 692 7 673 0 19
Zurich 8 686 8 665 0 21
San Francisco 9 681 13 655 4 26
Toronto 10 680 10 658 0 22

GFCI 10 uses 28,604 financial centre assessments completed by 1,887 financial services professionals.

Interesting stuff.

But next week the new Financial Secrecy Index from the Tax Justice Network is out and that will be much more telling.

Look for the overlaps I suggest!

 Posted by Richard Murphy at 2:47 pm
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