The government frequently says that it cannot change the law in the UK's Crown Dependencies and Overseas Territories as they are independent jurisdictions. As a result it pretends there is nothing we can do about the fact that they are tax havens.
This is not true. Start with the names. They are 'dependencies' and 'British overseas territories'. Internationally, they are ours. We are responsible for them.
And as a matter of fact note that as a result the world thinks, and the law accepts, that we are responsible for their foreign affairs. And since offshore is, by definition, all about foreign affairs because it records transactions that do not have their economic impact in the place that records the event then the offshore tax laws of all these places are wholly within the UK's responsibility and legislative remit.
In which case whether or not we can intervene in their internal laws (and action we took to demand domestic law reform in the Isle of Man suggests we can do that) we can most certainly enforce our will on their foreign policy, and so their offshore tax haven laws.
How do we do that? Simple. We pass a law in the UK. That works because all the overseas territories have constitutions that are, in any event, statutory instruments of the Westminster parliament. And the laws of all of these places require royal consent, which is given by the Privy Council, which is, in effect, staffed by the Cabinet for these purposes.
So let's stop pussy-footing around here. Let's demand reform or say we will deliver it.
What would that reform be:
- All accounts of all companies on public record
- All beneficial ownership on public record, proven by a requirement that banks confirm the beneficial ownership of companies they provide services to
- Directorships on public record
And I think:
- Trusts on public record
And yes, some of that goes beyond the UK requirement right now, which must be improved to match.
If we're serious about beating tax abuse - to create effective and fair markets, to ensure tax is paid, to beat corruption, to support democracy and to improve trust in society - then these steps are essential and the objections of the tax haven elite (who will, in any event, have no effective legal recourse against the legal right of the UK parliament) must be ignored, for good.
And if they really object? The answer is direct rule. And don't doubt we can do that. We took over direct rule of the Turks and Caicos Islands to beat corruption in 2009 and no one anywhere batted an eyelid. Nor would they in any of the other locations. But I'd rather we didn't have to do that.
But the one thing that is wholly unacceptable is any claim that there is nothing that we can do: that's completely wrong.
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Dominic Grieve was just on radio 4 blustering about how people would move their money elsewhere. Would they, and should we care if they did?
That’s an excuse for inaction
And it’s not true: if sanctions were imposed on Panama it would be very hard to do
Also look at my comments on capital controls
Thanks Richard
That’s the “if I don’t sell your kids heroin, then someone else will” defence, and it’s utterly disingenuous.
Agree with Mr Shigemitsu. Was also appalled by the other Dominic Grieve excuse for inaction, that clamping down on tax havens will deprive them of the economic benefits of their ill-gotten gains. Who will he be defending next, the mafia?
Yes, because these are dependent territories. If they have no income then we’ll have to pay in taxes to support them.
As for the “Tell ’em what to do” argument by Richard that could result in the dependencies choosing independence, and then what do we do?
They won’t choose independence
Because they know they could not survive
Don’t worry local “Loyalists” will oppose the Rebels.
Dominic Grieve also confirmed in the same interview that the UK government could legislate to abolish tax havens (and he should know).He followed this by pointing out that there are 28,000 people living in BVI, dependent on the financial services industry, and he suggested that we wouldn’t want to damage their interests. Very compassionate I’m sure.
It reminded me of another group of people, 40,000 in total, who are already desperately concerned about their financial futures, and hoping the government will do the right thing. These are of course those employed at Port Talbot steel works, and related businesses. I wonder if they deserve as much consideration as the good people of BVI, or if the steel industry is as important as the offshore tax business.
Quite so
Greive’s comments reminded me of the plight of thousands of British Citizen’s treated appallingly by our Government, who are still fighting for justice 40 years after they were evicted from their island home.
http://www.chagossupport.org.uk/
Perhaps had they been bankers rather than fishermen they’d have the ear of the Establishment here.
@AdrianD:
And if they’d been Falklanders instead of Chagossians they’d also have the ear of the Establishment here.
And the full force of HM Navy defending their rights.
Well said.
I suspect that in the beginning offshore business was tolerated/encouraged by UK gov as a way to make these places self sufficient.
These small rocks will always be “dependent” on UK. I don’t see how BVI, with population of 25k can ever be economically independent.
The unfortunate outcome of massively shrinking offshore business is that these islands will revert to fishing, tourism, and probably subsidy. It will be difficult for the populations to accept the change.
I suspect there are hundreds of Islands who would prove that laundering rich people’s cash isnt the only way to make a living, and that fishing, tourism, and probably subsidy aren’t the only or inevitable alternatives, but even if they were, so what?
Tru the Scilly Isles
What is the Navy for?
I propose that the MoD is renamed the Ministry of War, and opportunities subjected to cost benefit analysis. We should be able to take the Isle of Man without too many casualties, we could agree to divide the Channel Islands with the French to forestall any unpleasantness. In fact the natives of the Channel Islands would likely rise at the prospect of liberation 🙂
Then the race would be on for the Caymans, BVI etcetera.
Why would they do anything to change the status quo and deprive themselves and their families of un/low taxed income? The British bourgeoisie and aristocracy have been benefitting from these arrangements for a very long time. It’s been an integral part of their culture. Change only happens from the bottom up unless the plutocracy feels its power seriously threatened and then it throws just enough crumbs to the electorate to maintain social order. At least that’s what it hopes. Same old, same old. Sadly the British electorate has become soporifically supine and seems reluctant to move out of its illusionary comfort zone. So long as it can afford £7 for a skinny latte, a muffin and its monthly phone charges, it appears to be disinterested in what’s going on in the echelons of power. OK, I know that’s being fascetious – but what does it take to wake the people up to the corruption in government and banking sectors?
facetious (lol!)
‘take to wake the people up to the corruption in government and banking sectors? ‘
Clearly a hell of a lot and that point hasn’t been reached yet which is rather worrying. People know politicians are largely shysters but accept it as the norm. people are tired and feel powerless which is what they want (the neo-libs)-as Burke put it: ‘a tractable populace.’
Varoufakis makes a superb point in a recent interview:
“If Harold Wilson was an 18-year-old today, he probably wouldn’t want to go into politics. If Willy Brandt was an 18-year-old today, he wouldn’t want to go into politics. And this is why politicians aren’t what they used to be. It’s not because our DNA is degenerating. It’s that there is a natural Darwinian process, a natural selection process. Politics attracts the least well-meaning and least talented people because the political sphere has been devalued.”
Richard
You need to do some more research on the constitutional position, especially of the Crown Dependencies (which is slightly different from that of the British Dependent Territories).
Just because the Isle of Man agrees to a request to change something, that is not the same as the Isle of Man being forced to do it had it objected to the request from the UK government.
The UK government can only intervene in extreme circumstances. You are basing your allegations on something which has been going on in Panama, which of course has nothing to do with the UK constitutionally. It has no regulation of its fiduciary services industry whatsoever. Compare that with the Crown Dependencies who have the most advanced and most effective fiduciary services regulation in the world (remember this is something that the UK does not even regulate domestically). What has been happening in Panama simply could not happen in the Crown Dependencies these days. The Crown Dependencies have ALREADY done everything asked of them (and more – as any conversation with financial services professionals there will tell you – the JFSC and GFSC are extremely tough and diligent).
Any attempt to claim that the financial services industries in the Crown Dependencies today are so deficient in regulation that the UK should impose “direct rule” would need to be evidence-based. Take a read of the latest IMF and Moneyval reports, which blow any such allegations to smithereens.
There are jurisdictions out there which do not come anywhere nearly up to the same standards as the Crown Dependencies. They are far closer to Panama (both in standards and geographically, and many of them are not “British controlled”). That is where your efforts justify being channelled.
Attacking the Crown Dependencies based on their 2016 regulatory standards because of Panama is naive, ill-advised and, based on your history, simply malicious.
I am wholly aware of the constitutional arragements
Read the Kilbrandon Report
And the UK does impose on the IoM – albeiut not by direct legisaltion since 1967 because local politicians were wise enough to act on the messages they received
I do channel effrorts elsewhere, too. You are simplky revealing your paranoia
The Crown Dependencies could seek independence, but think of all the problems it would create! It would be rather like the UK seeking an exit from the EU and all the problems that could create.
All the arguments made about Brexit apply in equal measure to the Crown Dependencies, but they won’t stop residents of the Crown Dependencies considering going down that route if they are pushed hard enough and it won’t really matter who might think it is a really bad idea.
The overseas territories are far more remote and would seemingly have even less reason to remain a dependency. Certainly many small jurisdictions in the Carribbean have gone their own way already and there are other groupings they could choose to join instead.
More stringent laws on the publication of beneficial ownership won’t do anything to deal with corrupt law firms that supply false information to registries and banks, but I can see the desire to use these revelations as leverage for change.
But we can act now, a long time before they go independent
As Jeremy Corbyn said today, it just needs an Order in Council
As independent territories, without the protection of the 6th biggest economy, who would be interested in their financial wares?
No!
Would you care to list these “jurisdictions out there which do not come anywhere nearly up to the same standards as the Crown Dependencies” so I know were to take my billions as soon as the corrupt practices of evasion or avoidance facilitation are prohibited in these places that currently offer the “most advanced and most effective fiduciary services”?
Really Andrew, are you claiming then that places like the BVI, Bermuda etc are not tax havens? I suggest you read Nicholas Shaxson’s book ‘Treasure Islands and the Men who stole the World’ before you make such claims.
Michael wrote “..less reason to remain a dependency. Certainly many small jurisdictions in the Carribbean have gone their own way already”
So which of these small jurisdictions is now operating a cash laundrette for global tax-dodgers with impunity?
Is it just a coincidence these little crown dependencies get away with wreaking havoc with the worlds tax system are also able to shelter under the veneer of respectability given by appearing to be subordinate the the UK?
These places are only useful if they are backed by UK legal system
Richard
Sorry, but you have shown time and time again over the years that your interpretation of the Kilbrandon Report is entirely at odds with both the UK’s and the EU’s interpretation of the UK’s constitutional relationship with the Crown Dependencies.
Re your comment on the Isle of Man, the UK does NOT impose on the Isle of Man. It asks the Isle of Man and the latter has to decide. If the Isle of Man feels strongly enough to refuse, then it will do so. The fact that this line in the sand has not yet been breached does not mean that the Isle of Man will always do what it is told – at which point the constitutional relationship will be tested. You will recall that Gordon Brown was reminded several times about the constitutional relationships when he tried to ride roughshod over the Crown Dependencies. He had to take a step back after taking appropriate advice.
The extremely limited circumstances under which the UK can intervene are clear under Kilbrandon. The UK would not have a prayer of trying to enforce those powers because of their finance industries. They are very clearly highly-compliant and meeting the highest of global international standards. The UK is well aware of that.
My supposed “paranoia” is no such thing. I am merely defending the Crown Dependencies’ very highly-regulated industries. Indeed, you yourself have frequently commented on just how much progress has been made by the Crown Dependencies in recent years. Your targets are not the correct ones.
I consider you to be wrong
And the UK imposed frequently
Why else did the CDs comply with the EU Code of Conduct and Savings Direcyive?
Candidly, I suggest you stop lying and acquaint yourself with reality
I have
Richard
I really don’t appreciate the allegation of “lying”. I thought you were better than that. You really should check your facts.
Are you not able to understand the difference between (a) acceding to a request after considering the pros and cons, and (b) being forced to do something after rejecting it? Please come up with specifics re the “frequent” impositions on the CDs. You’ve made a statement – please back it up.
The CDs complied with the EU Code of Conduct and the Savings Directive because they saw no benefit in being at loggerheads with its neighbours. The direction of travel by the EU was very clear. Of course the islands could have said no, but would that have been beneficial? Of course not. But saying yes after considering the consequences is very different from being told yes by the UK after declining. If you cannot see that then I cannot help you.
You are not dealing with reality at all. Your perception of reality is way off line.
Respectfully, you are not just lying: you’re bullshitting too
How much clearer can I be?
And check my track record on Jersey, it’s impeccable
Richard
That’s bang out of order. You are wrong, and will be proved wrong, very publicly, regarding the constitutional position.
Then we will see who the bullshitter is.
The gloves are off.
Respectfully, I am entirely confident
I see that HSBC has been fingered as accepting accounts of sanctioned persons. This is all wonderful…
The compliance officer of the Panama law firm involved checked with HSBC about the Syrian looking after Assad’s fnancial affairs. She reported back that, if HSBC says it’s OK then that’s good enough for us.
To be fair to HSBC it is an allegation found in the documents of a firm of lawyers that allegedly falsified various documents on a routine basis. For all we know this email itself contains false information. Of course if copies of documents sent by HSBC to confirming this can be found that would be rather more useful.
Yes, I heard that on R4 last night as well Carol. Who would have thought it eh? The largest bank in Britain helping a corrupt businessman evade sanctions; but of course, HSBC has form in this area doesn’t it?
So, naturally, when HSBC started complaining about the ‘burdens’ of tax and legislation in the UK and hinted they might move to HK, our genius of a chancellor promptly gave in and dropped the bank levy in favour of a lighter tax.
That’s the Conservatives for you. Grovel to the corrupt financial industry, and let the steel industry be put out of business by the Chinese state.
Oh and here’s another HSBC link (all praise to Margaret Hodge): http://www.ft.com/cms/s/0/c5f7dca0-fa6a-11e5-8f41-df5bda8beb40.html#axzz44z5BYA6y
If one butcher’s shop on the high street is found to be selling horse meat do you close each and every butcher’s shop down?
No
But you do if they are all selling hors meat
And judging from your email address you are
Why do you write such scaremongering nonsense all the time?
The chances of the UK ever intervening with a Crown Dependency in such a way on tax matters is zero. Geoff Cook had you well owned on Radio Jersey this morning for talking absolute tosh.
Geoff Cook talks absolute drivel that the world laughs at behind his back
And for more than a decade he has said I am wrong when on every issue from the black hole onwatds I have been right
So believe Geoff is you wish, but only fools do
Richard,
Only fools and horses, mind you….
That interview with Dominic Grieve on R4 this morning was exactly what one would expect from someone defending the status quo. Much careful use of language to suggest that this is simply how globalisation works, tax competition is perfectly ‘legitimate’ and nothing much can be done about it.
This repeated use of the word ‘legitimate’ really grates. It’s a word that tries to carry the weight of unquestionable approval around with it, while actually saying very little and having no moral force. All it really means is ‘conforming to law and able to be defended/justified ‘. The former could be changed if enough pressure were brought to bear, and the latter is highly dubious if the only real defence you have is to say ‘well, it’s lawful’. Other unsavoury things have previously been ‘legitimate’ until we collectively decided that they weren’t.
The crux of the interview for me came when the interviewer ended a lengthy framing of the impact of tax avoidance on society at large and how the richest could remove themselves from their tax obligation with the simple question, ‘is that acceptable?’ Grieve seemed momentarily flummoxed. ‘It’s… a moral question…’ he began, before making rather tenuous comparisons with the 1970s and ending with the defeatist assertion that our best option was to ‘provide the right environment domestically in terms of tax which guarantees that people wish to keep all their tax affairs in the UK or indeed any other European state’.
So a race to the bottom then. Or the cowardly state, in other words.
Agreed
Shameful of him
The should be called ‘The Adam Shite Institute’ IMHO.
They are so far removed from the man they are named after now that they should be taken to court under the trades descriptions act.
I have just watched a BBC interview with some numpty from the notorious Adam Smith Institute claim that the reason tax havens exist (and should continue to do so) is because some countries taxes are too high, then going on to say this country should reduce its taxes even further (on the wealthy and corporations is what he meant but didn’t say it), and that this was the natural effect of healthy tax competition.
At what point did the difference between an advanced post-industrial economy where massive amounts of wealth have been accumulated by a small number of people over many centuries leaving millions in relative or absolute poverty, versus a small simple economy of a tax haven with typically few people to support or public services to provide – ever form the basis of something to create a tax competition argument?
It not only ignores reality, it is an insult to even my teenage children’s intelligence to try to explain how these people claim to be a “think tank”. The only thing they can “think” about is their own self-interest and that of their donors and supporters. Why the BBC continues to include them in intelligent debate is beyond me!
The ASI is utterly shameless on this issue
And a complete enemy of free markets
Tom and Sickoftaxdodgers
I actually had in mind Curaçao, Barbados, Bahamas, Nevis, Antigua and Delaware.
Further afield Vanuatu, the Cook Islands, the Marshall Islands, the Seychelles and Dubai.
Plenty of choice for you there.
Bahamas is an issue
Delaware is a very particular haven
Dubai, a place apart
The rest, no one with sense goes near
Vanuatu you almost can’t
Do you gave a clue what you are talking about?
Use your voice to petition government to act on this and send an email to your local MP expressing your views on this matter so they are clear what their real constituents think.
https://speakout.38degrees.org.uk/campaigns/774
Shut down British owned tax havens
To Rt Hon David Cameron
Petition text
Please shut down British owned tax havens like the British Virgin Islands. You’ve promised to crack down on tax dodging for years – now’s the time to get stuck in. The mega-rich shouldn’t be allowed to get away with paying less than their fair share of tax.
Just heard Iceland’s PM has resigned – after significant public outrage. Can’t imagine the public here bothering to switch off the TV long enough to protest!
See: http://www.nytimes.com/2016/04/06/world/europe/panama-papers-iceland.html?smid=tw-bna&_r=1
And now there’s a petition, of course. Who could believe this happening, Richard, when you started out with John and Prem all those years ago?
We’ve made progress
It is only because of people like Richard, John & all the others associated with Tax justice campaigning for the last 10 years that any progress has been made. War on Want is a very small NGO with limited funds but they have also campaigned & exposed to the general public. The trouble is that the subject is very dense for even some of the more informed people to agree, so the message needs to be consise, hard hitting & accessible to the masses.Austerity has ground down so many working people that they are struggling to keep their heads above water. However, look at Iceland. Literally tens of thousands of people, many in the early twenties campaigning for change & saying the resignation of the Prime Minister is not enough if he is being replaced by another corrupt puppet.
40 new laws passed by this government was the claim on Channel 4 by the Tory minister. What are they? how are they being imposed? & if like with Google they are a fraction of what other countries have collected then it’s handly progress. HMRC can not cope with the day to day work they are required to do let alone enforce any “minor” changes to tax laws. All this is because the Tories have to do something to save face not because they thought of it or want to make any changes to a system that benefits themselves & their cronies.