World leaders and tax dodging: an Absence of Will
Guest blog by Joseph Stead, Christian Aid
When a previous poll was undertaken in February, 80% of the public were angry about tax dodging, and 34% were boycotting products because of companies’ tax practices. The same percentage are still boycotting products - and 84% are now angry.
Furthermore, despite the pre-G8 commitments made by the UK’s Overseas Territories and Crown Dependencies, there is also clearly a desire for further reform in UK-linked jurisdictions. Of the 2,028 Britons questioned, 74% agree with the statement that ‘the UK is responsible for these territories and should force them to make information about company ownership publicly available by using all available means.’
While I’d love to be able to say what the UK government response to this will be, I can only point out what our poll suggests it should be.
Cameron made transparency of company ownership a key part of the G8, and it’s not hard to understand why. The Africa Progress Panel highlighted how the use of anonymous companies registered in the British Virgin Islands involved in just five mining deals in the Democratic Republic of Congo cost the citizens of the DRC $1.35bn, or more than twice their annual health and education budget combined.
As Kofi Anan, former UN Secretary General and head of the Africa Progress Panel said: ‘When foreign investors make extensive use of offshore companies, shell companies and tax havens, they weaken disclosure standards…such structures also facilitate tax evasion and, in some countries corruption, draining Africa of resources that should be deployed against poverty and vulnerability.’
The public get it, too. When asked why people might want anonymous companies, the leading answers were: for tax evasion and avoidance (78%), to hide their true wealth (70%) and to hide criminal behaviour (59%).
But having made company ownership transparency a key part of the G8, Cameron stopped short of doing what he wanted to. He said he personally supports a public register of the real owners of companies but when it came to the G8, he stopped just short of taking that step.
He’s decided to have a consultation instead. There is still a while to go before the consultation closes on 16th September, but the people we polled had a fairly clear view, with only 9% agreeing that the owners of companies have a right to privacy.
With the UK committed to establishing a registry, making it public should be a no-brainer, as some in the business world have agreed. The extra cost would be minimal. It would ensure that developing countries could access the information easily and quickly, without the need for treaties to allow exchange of information. It would allow many eyes to analyse the data to spot both areas of concern and errors.
Knowledge that there would be many eyes would also deter many from even trying. It would also help make banks perform due diligence both quicker and more effectively and would be a first step in building back trust and confidence in businesses. That, in turn, would support both access to credit and the rebuilding of some of the social trust that business has lost in recent years.
The public is also clear that the UK should extend requirements for public registries to the Overseas Territories and allow the citizens of the DRC to see who controls the BVI companies that have stolen their money.
Joseph Stead is Senior Economic Justice Adviser at Christian Aid. Christian Aid have just launched a new campaign in the UK calling for public registries of beneficial owners