Financial Times: War on Tax Piracy is Making Progress
But the progress to date is just a start. The initially modest standards set by the OECD in April need to be ratcheted up significantly: twelve signed and sealed tax information exchange agreements does not spell the end of the tax evasion industry, and poorer countries remain conspicuous by their absence from the table. Likewise, as the FT observes, the standard promoted by the OECD is weak and even if they do "make tax evaders sleep less easily" we must continue to press for a far higher standard for international tax information exchange.
The FT is also right to push the UK government to "make sure that its own overseas territories do not remain safe for tax evaders", which means tackling the mis-use of trusts and other entities that have their basis in English Common Law. This is crucial in the run-up to the Pittsburgh G-20 Summit, since G-20 leaders will rightly be accused of hypocrisy and worse if they brag about tackling banking secrecy but have nothing to say on the subject of trusts and similarly secretive devices.
The one small matter on which we would take issue with the FT editorial relates to what we regard as the bogus arguments touted around by the supporters of tax havens. This is what the FT says:
Supporters of banking secrecy have wrung their imaginations dry in coming up with ingenious defences for secret accounts. The very real fear of kidnapping in places such as Latin America is one of the few good reasons that might justify allowing the rich to hide their wealth. But for the most part opacity simply helps to evade taxes.
Now the kidnapping threat is one of those red-herrings that pops up virtually every time we discuss with the tax evasion industry. It was thrown at this blogger in Geneva in 2007, again in Douglas last autumn, and in both Saint Helier and Vienna this spring. Do we smell the whiff of an orchestrated PR puff? Whatever the origins, the argument quickly dissolves when exposed to common sense and we have addressed it, at length, here. Anyone who has worked and travelled in Latin America will know that everybody, and we mean EVERYBODY, knows who is rich. The idea that the rich even attempt to hide their wealth is frankly bizarre in a continent noted both for its extremes of inequality and the in-the-face devotion of the the wealthier classes to conspicuous consumption.
The FT rightly comments that the pressure on the tax havens must not be lifted. TJN is determined to keep the pressure full on. Tax havens are on the back foot: as every boxer knows, that's the time to strike again and again and again. Banking secrecy, trust secrecy, non-disclosure of corporate ownership, accounting opacity, weak information exchange processes: all must be swept aside for once and for all. This is just the beginning of the end of the tax havens . . .