TJN's new comment article in the Financial Times: Stop this Timidity in Ending Tax Haven Abuse
The world risks wasting this political capital on the wrong targets. We are pursuing the timorous policies of a past age to tackle tax havens.
The piece comes in the same FT edition as another article entitled “EU majority backs clampdown on tax havens” which is most welcome, not least because the UK – which has for years played a spoiler role in the tax haven debate – has indicated its intention to support the clampdown. Given the outrage now emerging in British newspapers about tax abuses, this development is perhaps less surprising - but we will be watching them very carefully, of course. We are also heartened by this story, illustrating how "the French government plans to use its presidency of the European Union this year to crack down on tax havens."
We will not report TJN’s entire FT article here - please read the whole thing instead. But we would like to expand on some of the points.
Perhaps the most important one is this. Current initiatives to crack down on tax havens, such as those pursued by the OECD, have been watered down so badly by vested interests that they are not only ineffective, but they have legitimised the illegitimate. Perhaps the most important element to note here – and this is one of TJN’s most important policy areas – is that these schemes only ask for countries to exchange tax information with each other on request. As the article says:
In other words, you must know what you are looking for before you request it. This is shockingly inadequate. We need the automatic exchange of tax information between jurisdictions and all developing countries must be included.
Pro-tax haven lobbyists argue very loudly that if automatic information exchange were enacted, nobody would have any privacy. The argument is entirely, absolutely, bogus.
First, our governments already require us to exchange all our tax information with them – you are breaking the law if you don’t report your income and pay your taxes. Why ever should we allow a small, charmed section of society to opt out of this perfectly normal and healthy democratic bargain? This is about transparency, not control, and anyway taxation makes governments healthy and responsive to citizens’ needs. Second, in our experience those who use tax havens to preserve the secrecy of their financial affairs are not the campaigning journalists, human rights fighters and oppressed citizens, but the kleptocrats, dictators and cronies who are oppressing them. End offshore secrecy, and the world will be a freer, happier, and better governed place.
Automatic exchange of tax information – alone - would tranform the planet, and make it a better place. If enacted, it would also help restore the world’s faith in globalisation itself, which for many good (and some bad) reasons has been getting a very dirty name of late.
More on this shortly.
As an aside, in this context, we would like to highlight this rather comical press release from a group of wealthy and high-profile lobby groups in the United States, which attacks TJN after we had the audacity to host a briefing on Capitol Hill on Offshore Tax Evasion. In the press release we are accused of threatening groups such as homosexuals in Saudi Arabia and elsewhere, and the lobbyist Grover Norquist admits that “the U.S. is a tax haven”. It may seem odd to be highlighting the arguments of our opponents, but what we have come to realise is that these stupendously wealthy institutions simply have no answers to the agenda we are creating. We will happily continue to dissect all their arguments in this and future blogs.
Separately, we should also point out that John Christensen also has a letter in today's Guardian newspaper, concerning Tesco's tax tricks.)