UK calls for international co-operation on tax
“There is a strong economic and social case for strong co-operation and exchange of information between Governments and tax authorities around the globe, and particularly within the EU, in order to meet the challenges being posed by globalisation, not just for economies as a whole, but also specifically for national tax systems.”
This is exactly right, and we will hold the UK government to this. We do hope the UK will henceforth comply not only with the letter, but also the spirit, of these words. Unfortunately, we have reason to doubt that this will happen. First, Robertson went on to call for "flexibility" on tax - a very general statement which does not fit comfortably with the word "co-operation" and may render his earlier statement rather meaningless.
The United Kingdom not only has a record of obstructing international co-operation on tax - it is also responsible for having put into place a huge part of the abusive international system of tax havens. During the years of decolonisation the British Foreign and Commonwealth Office (FCO) actively sought to turn many of its former colonies, such as the Caribbean islands, into tax havens. This was partly motivated by a desire to avoid creating long-term dependencies on the UK (by allowing them to finance themselves by appropriating money from other nations' economies and tax systems) but also to retain some links with London, bolstering its status as a world financial centre. In effect, the Crown Dependencies and Overseas Territories are satellites of the City of London, channelling capital and other nations' tax dollars, not to mention a lucrative bonanza of fees for lawyers, accountants, bankers and others.
Britain has been helped by the silence of the regulators. It has resisted efforts to look into the tax dimensions of the international financial architecture, working discreetly behind the scenes (in partnership with many others) to help ensure that tax is kept off the agenda wherever possible. Very senior European officials have told TJN - and occasionally spoken openly about - Britain's role in putting stumbling blocks in the way of, or inserting loopholes into, the European Union's Savings Tax Directive - which is, while still deeply flawed, currently the world's most impressive effort at a co-operative international attempt to tackle the problems of abusive tax practices. It has used tricks such as diverted attention to more peripheral issues - such as drugs and terrorist financing - to hide the elephant in the room: tax.
Read more about Britain's role here. Read more about the importance of tax co-operation here.
(As an aside, a couple of important initiatives on tax are going on in Europe at the moment. One is work on a Common Consolidated Corporate Tax Base (CCTB), which the EU's tax official Mathias Mors commented about in Warsaw. For those interested in reading about recent developments, click here and here.)