UK resists global governance

It's getting almost boring how often we have to take the UK to task over its resistance to any kind of international governance in the field of global finance. It's not just us saying it, though. Here's Willem Buiter, a highly respected economist and columnist in the Financial Times, delivering his latest (very welcome) broadside:

"The UK under Chancellor of the Exchequer Gordon Brown continued the tradition established by the Conservative Party since Margaret Thatcher of opposing any strenthening of the global coordination of national financial regulatory regimes. Brown, like the Conservative Chancellors before him, opposed with special vehemence, and and all initiative for common regulation, let alone supranational regulation in the one arena where it could have been delivered most easily: the EU."

In case you didn't see it, a recent blog of ours, written by John Christensen after a meeting of the UN Tax Committee in Geneva, gave a specific example of the UK's truly shameful stance:

"In light of the appalling growth of inequality, the steady decline of the ability of governments in poorer countries to fund essential services, and the social damage caused by tax evasion, the case for strengthening cooperation on tax matters is stronger than ever. Sadly, however, in Geneva on Tuesday I witnessed the sordid spectacle of three major tax haven countries, Belgium, Ireland and the United Kingdom, voting against a proposal to strengthen the role of the UN Tax Committee, flying in the face of the wishes of the developing countries, who voted en masse in favour. It is fair to say that the majority of the expert members, observer countries and civil society participants at the Geneva meeting seethed with anger at the naked power play by these tax haven economies."

Let's not forget, British Prime Minister Gordon Brown told the United Nations General Assembly in September that "we must now build a new global financial order founded on transparency not opacity." Yet Britain remains committed to obstructing progress in this important area.

Back to Willem Buiter:

"The UK, under Chancellor of the Exchequer Gordon Brown became a lead player in the regulatory race to the bottom through which nations tried to poach financial service industry activity from competing national centres or to stop their own financial enterprises from relocating abroad.

It is surprising that someone who was such a compulsive micro-tinkerer in the domestic labour market, in the domestic tax, transfer and subsidy structures and in the regulation of industries producing mainly non-traded goods and services, would when it came to financial markets and institutions, become such a devoted disciple of Alan Greenspan - the guru of self-regulation by financial institutions and of deregulation of financial markets and activity across the board. Indeed, Chancellor Brown even appointed Greenspan a special Adviser when Greenspan retired from the Chairmanship of the Fed early in 2006."

Adding this:

"the UK, under Gordon Brown as Chancellor of the Exchequer, became the leading protagonist, often even ahead of the USA, of self-regulation wherever conceivable for banks and other highly leveraged institutions, and at most light-touch regulation (i.e. soft-touch regulation) where self-regulation blatantly made no sense."

And, goodness, even more bile:

"Given Gordon Brown’s ruinous fiscal and financial stability legacy, Paul Krugman’s question in his October 12 New York Times column, “Has Gordon Brown, the British prime minister, saved the world financial system?”, can only be answered one way: no he has not. He has left a ruinous legacy of financial instability and lack of fiscal restraint at home. He has been one of the principal cheerleaders for the competitive international deregulation of international financial markets and of border-crossing financial institutions. He is one of the fathers of the crisis."

Phew! Here is a man who doesn't mince words.

Gordon Brown on exchange of information for tax purposes

Gordon Brown, Britain's former Prime Minister, has been interviewed for the Swiss newspaper, Tages Anzeiger, on the release of his recently published book: "Beyond the Crash: Overcoming the First Crisis of Globalisation", (or, translated from the German title: "What follows: How we create new growth worldwide".)

Gordon Brown said he tried harder than any other British politician to clamp down, and more, on tax haven abuse. Here we translate an except from the interview:

Gordon Brown observes:

"We have, today, a global financial system, but we do not have global supervision. And we have a globally interdependent world community, but we have no global coordination on growth."

The interview proceeds:

You want the banks to be better controlled with stronger supervision. The banks then threaten to relocate to other jurisdictions. How realistic are their plans?
"That confirms exactly what I say! We have global banks, global flows of capital, which are regulated by national authorities. That cannot function. Therefore financial centres such as Switzerland, London, Frankfurt, New York must coordinate on international regulation.

Financial Centres live for the banks. So how are they going to agree to this?
It seems to me, that the people who caused the financial crisis, should not now be advising us. That is the task of the elected governments, who must recognise: self regulation does not work. For global problems we need global solutions. The G-20 made a start in 2009 with tax havens - we stated that they must agree to exchange of information on tax matters for foreign bank clients. There were people who called in the middle of crucial meetings and warned us against a black list. Nevertheless, we have broken through that.

[TJN: who were these people who called? We are dying to know! Time for someone to spill the beans.]

Switzerland has finally agreed to the OECD's specifications for information exchanged on reasonable request. Is bank secrecy now reduced enough?
No one has done enough! If this information exchange is not effective, people will grab at more direct methods. It is best that we extend information exchange to the point that it truly functions.

You encourage Switzerland to engage in automatic exchange of information?
In the long term there will be a rebellion against financial centers that do not make the information voluntarily available.

Does that mean: you maintain that automatic information exchange is inevitable: yes or no?
Let go of the hair-splitting between "automatic" and "on demand". What we need is functioning information exchange!

Swiss bankers have blamed you for protecting London's financial center.
That is not true. The entire EU benefits from information exchange.

[TJN: what a non-sequitur!]

The British tax havens like the Channel Islands have not however been put in the pillory.
However these are now also covered by information exchange agreements. I was probably harder on tax havens and the whole tax avoidance industry than any other British politician. It is truly a sad sign of the times, that it can always be said, there could be a race to the bottom.

Gordon Brown is making nice noises, but the truth is he was rather gutless when he was in power. He definitely wasn't as hard on tax havens as, say, Vince Cable, or Lord Oakeshott, or a few others we could mention. Then again, they had the luxury of not having to implement this stuff.

We at TJN support the emerging consensus that the world needs to progress quickly away from the flawed OECD standards and towards much stronger and better forms of information exchange, notably "automatic" information exchange between jurisdiction, on a multilateral basis. See here for more details on all that.

Besieged Brown and the tax havens

A new article entitled "Brown plans global scrutiny of tax havens" suggests that UK Prime Minister Gordon Brown is taking the tax haven issue seriously. This is slightly at odds with a blog we did last month casting doubt upon the UK's commitment to the issue. Since then, we've received some encouraging signs. The article says:

"Despite a rearguard action by tax havens, the prime minister intends next week's G20 summit to discuss plans for a multilateral exchange of information on "offshore" accounts."

We like the word "multilateral" very much, very much indeed (an alternative, bilateral deals, means that many billions of people, notably from developing countries, will fall through the cracks.) The article added:

"Brown would like the Paris-based OECD to work out a detailed blueprint for reform over the coming months if, as expected, the London talks on 2 April back action to combat capital flight and improve transparency."

Ah. The OECD. Well, change is possible, but we have recently taken a very dim view of what seems to be happening at the OECD at the moment.

And now the question of automatic exchange of information (which we love), versus exchange of information on request (which we loathe:)

"Campaigners said the initiative was welcome but said much would depend on what tax havens would be forced to reveal. Under the current OECD plans, exchange of information is not automatic but relies on those making inquiries knowing full details of accounts and account holders. . . . Richard Murphy of the Tax Justice Network, said: "A multilateral system is the way forward but to be fully effective it would have to be automatic."

But of course caution is the watchword.

"Government sources said the UK was taking reform of tax havens step by step, fearful that pressing too hard at this stage would damage the growing international consensus for reform. They said Downing Street had been "besieged" in recent days as tax havens reacted strongly to signs that they will be the prime targets of proposals to toughen up international regulation."

In short, we are giving UK Prime Minister Gordon Brown a little more benefit of doubt than we were before, but we are most conscious of the powerful political forces arrayed against him. Brown is certainly in political difficulties over this, and the opposition Conservative party which currently has a significantly better than average chance of winning at the next election (which must be held by June 3 next year) is, notwithstanding Brown's appalling record on tax havens, the traditional party that supports the offshore system.

So we'll look forward to concrete steps - and we'd like to see is a clear roadmap for implementation - but won't hold our breath for too much yet.

Links - Jan 31

** Also see our searchable archive of past story summaries, and Offshore Watch for more stories. **

We need more than sticking plasters, warns leading Labour backbencher
Jan 29 (Independent) - A prominent Labour backbencher has warned Gordon Brown that he needs to find a "new language" to explain to the public the actions that the Government is taking in the recession. He urged Mr Brown to launch "two crusades". One would be on "tax justice", including minimum tax rates throughout the incomes scale so that the rich paid their fair share and joining President Obama's crackdown on offshore tax havens.

Dear Western banking establishment,
Re. your unauthorised overdraft.
I notice that your unauthorised credit facility from international lenders of last resort now totals approximately $10 trillion. As a taxpayer and therefore your largest shareholder I would be grateful if you could repay this facility at your earliest convenience.
I would also be grateful if the strategists and economists who work for you could abstain from publishing their unsolicited opinions about resolving the banking crisis within the financial media.

BRITISCHER PREMIER IN DER KRITIK
Web translation here
Jan 28 (Der Spiegel) – Germany’s Der Spiegel Magazine takes a look at British Prime Minister Gordon Brown’s credentials – on the one hand claiming to favour transparency in international finance, while on the other, quietly backing the tax haven world. Quoting TJN’s John Christensen widely.

Brazil Freezes $2 Billion Amid Money-Laundering Probe (Update3)
Jan. 22 (Bloomberg) -- Brazil froze more than $2 billion in accounts outside the country as part of a money-laundering case involving Brazilian investors including banker Daniel Dantas.

New initiatives to tackle International tax avoidance
Jan 26 (HMRevenue and Customs, UK) - The Right Honourable Stephen Timms MP, Financial Secretary to the Treasury said: "The vast majority of taxpayers pay their fair share and do not seek to avoid their financial responsibilities. The avoidance industry seeks to profit from enriching those who are prepared to seek an unfair advantage over those who play by the rules. This in turn denies member countries vital financial resources.

Record capital flight from Argentina last year: 23 billion USD
Money leaving Argentina trebled in 2008 compared to the previous year and was 23% higher to the great capital flight of the second half of 2001 and first half of 2002 which totalled 18.7 billion US dollars and triggered the collapse of the banking system and melting of the economy, according to a report in La Nacion.

Put squalid tax havens out of business - Red Ken
Jan 26 (Guernsey Press) - Mayor of London Ken Livingstone is the latest high-profile commentator to target closing down Guernsey as a ‘tax haven’. Livingstone joked about invading the island to achieve this aim and pointed out that de Gaulle tried to prevent tax avoidance in Monaco by sending tanks to the principality’s border. In an open letter to Gordon Brown he talks more seriously about international changes creating the chance to ‘squeeze squalid little tax havens out of existence’.

Please don’t do it Zambia: you must tax copper
Jan 27 (Tax Research) - Some stories really hurt. This one in the FT does: “Zambia, Africa’s biggest copper producer, appears poised to drop plans to secure more of its mineral wealth.” This is a disaster if it’s true.

Banks failed to register subsidiaries in 'oversight'
Jan 25 (Observer) - Two of Britain's biggest banks have failed to register the location of their subsidiaries in what appears to be a contravention of British company law.

A runaway train
Jan 28 (Guardian, by Alex Cobham) - The question: What economic system would really benefit humanity?
The same secrecy and lack of regulatory coordination that caused the crisis also imposes other costs on developing countries. This is especially clear in relation to tax. Multinational companies' and rich individuals' ability to exploit tax havens and hide their profits is depriving poor countries of staggering amounts of revenue.

Transparency, Accountability Key to Restructuring of Global Financial System
Jan 28 (GFIP) - As policy makers, business leaders, and institutional stakeholders convene in Davos, Switzerland for the World Economic Forum, Global Financial Integrity (GFI) urges participants to call for greatly improved financial transparency and accountability. The importance of one of the Forum’s themes, “Addressing the Challenges of Sustainability and Development,” is underscored by a new GFI report titled “Illicit Capital Flight Out of Developing Countries: 2002-2006.” The key finding of the report is that developing countries lose as much as $1 trillion dollars a year in illicit capital flight as a result of illegal commerce, corruption, and tax evasion.

Private Equity and Tax

John Christensen was asked recently how TJN judges its success. He replied that he likes to measure it in terms of how TJN's concerns and issues become the mainstream perceptions of others. As the last few blog posts highlight, this is happening, in a big way. For starters, traffic in recent months to Richard Murphy's Tax Blog, also flagged on the TJN web site (above this blog), has been surging. Material backing TJN’s positions is appearing constantly in high-level media across the political spectrum from left to right. Currently, the message is resonating especially loudly in the United Kingdom. On June 3 the Financial Times carried on its front page an interview with Nicolas Ferguson, who built what is now Europe’s biggest private equity company. The FT said that Ferguson has "broken the sector's taboo on tax." Here is an excerpt from what he said:

“Any common sense person would say that a highly-paid private equity executive paying less tax than a cleaning lady or other low-paid workers, that can’t be right. . . I have not heard anyone give a clear explanation of why it is justified.”

Polly Toynbee responded to this article in her latest comment piece in the Guardian newspaper: Gordon Brown, she said, “will be asked why, as in most other countries, private equity cannot be made more accountable, why it shouldn't post bonds to protect pensions and, above all, pay taxes like everyone else?” Quite right Polly. The next day, the FT published chancellor Gordon Brown's response, in another front page story, with the tantalising headline: "Chancellor pledges justice on tax rates." Brown pledged, in relation to private equity and in response to Ferguson's remarks, to "make sure there is justice and equity in the treatment of tax arrangements in that area." As the FT story outlines, Brown looks like he is starting to act too. Paul Kenny, general secretary of the GMB union, drew his own conclusions from Brown's comments: "the fat cats are losing the argument on tax, and it was very noticeable that he (Brown) did not leap to the defence of the industry which he has done before."

From a different perspective, the poverty campaigners War on Want are building their own campaign on tax dodging. Tax, they say, is a key weapon in the fight against poverty, adding that "the UK is a major part of the global problem of corporate tax dodging. We believe it should be part of the solution." Quite right too.

All this looks rather like tax justice, catching on fast.

Has Gordon Brown got the Tax Factor?

Christian Aid is asking you to send an e-mail to Gordon Brown.

The text on their website is self-explanatory. Please read it, and act.

Tax is the key
We believe poor countries should be able to use their own wealth and resources to help them work their own way out of poverty.

However, the tax revenues some multinationals fail to hand over to developing countries are depriving some of the poorest people in the world of money they need to pay for schools, hospitals and roads.

The current economic crisis is a rare opportunity for root-and-branch reform of the financial system that would benefit rich and poor countries alike.

This includes ending the secrecy surrounding the tax that multinationals pay to governments.

Act now!
We cannot stand by and let this continue.

If the secrecy surrounding multinationals’ profits ended then countries would know whether they were getting fair taxes from their profits.

Multinationals must publish the profits they make in every country where they operate. The world leaders in Doha cannot deliver an end to tax secrecy alone, but they could make a start.

We can make sure the British prime minister helps get his colleagues singing from the same songsheet.

Email Gordon Brown and ask him to prove he’s got the Tax Factor.

Go on, do it. Click here

G20: what we got

We are relying heavily on Richard Murphy today, who is an official G20 blogger. Here is his assessment of what we got, cut and pasted directly from his blog. We hope he doesn't mind - he does the same to us from time to time.

"This has been an extraordinary afternoon – and one where it has been hard to blog.

Gordon Brown declared the end of the Washington Consensus this afternoon. I’m not sure that’s true – it has many devotees still. But on tax havens we have the following:

"to take action against non-cooperative jurisdictions, including tax havens. We stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over. We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information"

Good enough? Let’s put it like this. We have a list (although no one has seen it – it seems to have taken the OECD by surprise). I’m told it’s long and Switzerland is on it.

We have a commitment to ending banking secrecy. I do think they mean it. We have a commitment to information exchange.

We have sanctions. These are vital.

Let’s say what we also have but which is not in there but which is on documents Downing Street has shared with me:

A call from Gordon Brown to the OECD to include tax avoidance as well as evasion in this process. That is important. Tax information exchange agreements cannot deliver that. He intends to go further. His letter will, I’m told, be issued tonight.

A G20 commitment in the communiqué annexes to extend this process to developing countries. That is new.
Gordon Brown is calling for an extension beyond OECD processes.

I asked theBritish PM a question about tackling tax avoidance and helping developing countries at his press conference. I am at present convinced there is intention to tackle both.

So what’s the big disappointment? No mention at all of automatic information exchange. Not a hint. But, and I think this important, it’s hard to see how after this the EU cannot commit to the revised EU STD now – and that is the prototype for automatic information exchange of the sort we want.

I am pleased, and I am disappointed. But overall I’m more pleased than disappointed. The tax haven initiative has been dead for eight years. It is not now. It is very alive, it is delivering real change and the environment for more change still has been created.

I and the Tax Justice Network will of course be demanding more, and will be pushing for all that is promised now. But, this is an historic day. Don’t doubt it.

Read more on Richard's blog, here. And read what the Guardian said about tax havens, here.

Links - April 8

** Also see our searchable archive of past story summaries; and Offshore Watch. **

OECD takes four tax havens off blacklist
April 7 (Reuters) - Four finance centres blacklisted last Thursday in a renewed crackdown on tax fraud were taken off the list on Tuesday after committing to international standards on bank information disclosure.

G20: Les gros se ménagent et s’en prennent aux petits
April 8 (e Temps) – The EU is not, or is no longer, defending its small members states against the larger ones. English web translation here.

Sévère passe d’armes entre la Suisse et l’OCDE au sujet du secret bancaire
April 8 (Le Temps) – Switzerland accuses the OECD of having been manipulated by the G20, while the OECD demands that Switzerland ratifies its exchange of information commitments rapidly. Translation.

Tax havens: any real change?
UK Prime Minister Gordon Brown declared "the start of the end" for tax havens as we know them, at the conclusion of last week's G20 summit in London. Is this the beginning of a new era of transparency in banking? TJN's Matti Kohonen debates with Pascal Saint-Amans of the OECD. English version, French version.

Tax haven crackdown not to yield much for India
April 7, 2009,

Cayman Islands plays down "gray" tax haven listing
April 3 (Reuters) - The government of the Cayman Islands, a major Caribbean financial center, said on Friday it was moving to improve its cooperation to fight tax evasion and played down its inclusion on an OECD "gray list."

Northern Rock has £1bn branch in tax haven
April 5 (Times) - GORDON BROWN has been accused of the “height of hypocrisy” for allowing the state-owned Northern Rock to run an offshore bank in the Channel Islands while he is leading a global campaign against tax havens. Northern Rock Guernsey boasts on its website that it is a “major competitor in the offshore retail savings market”.

Swiss to discuss working with U.S. on tax
April 6 (Reuters) - Switzerland will start negotiations with the United States over its existing double-taxation treaty at the end of April, the Swiss ambassador to the United States told Swiss television late on Friday. "The first discussions already took place in Washington last week.

Officials: Nevada not tax Haven : State leaders rebut statement by premier from Luxembourg
April 6 (Las Vegas Review Journal) - The Senate Permanent Subcommittee on Investigations three years ago questioned a deputy secretary of state from Nevada, a Delaware official and others about laws that allow corporations to withhold the identity of their owners. An official told the subcommittee that the Internal Revenue Service was considering "mass audits" of Nevada corporations that do not file tax returns. An IRS official late Friday did not immediately know whether the agency conducted the audits.

The trouble with tax tricks
April 4 (Guardian) - Tax avoidance has created a mirage of large corporate profits, which has turned many a CEO into a media star and even secured knighthoods and peerages for some. Yet the profits have been manufactured by a sleight of hand. Let us get back to the basics.

Estate Tax: Senate Approves a Break for Millionaires that Leader Reid Calls "So Stunning, So Outrageous"
April 3 (CTJ) - Incredibly, 51 Senators voted to approve an amendment offered by Senators Blanche Lincoln (D-AR) and Jon Kyl (R-AZ) to cut the estate tax even more than this. The 2009 estate tax rules exempt the first

Cayman Islands signs tax information agreements with Nordic economies
April 1 (OECD) _ The Cayman Islands has signed bilateral agreements with seven Nordic economies - Denmark, Sweden, Finland, Greenland, Iceland, Norway and the Faroe Islands - on exchange of information for tax purposes.

Sinking assets
April 2 (The Economist) – The Economist changes its tune on tax havens. On Britain’s Crown Dependencies -Richard Murphy, who campaigns against tax havens, argues that, whatever else they may claim, these two Channel Islands rely on secrecy to attract business. If that is stripped away they are “dead in the water”, he says.

Live from the G-20 Summit: Another Blogger Breakthrough
April 2 (Huffington Post) I became the first blogger ever in world history to ask a question at a summit conference to a prime minister who had hosted the meeting. Listen to Richard here.


The strange case of Macau, the tax haven that disappeared
April 3 (BBC) – A reporter digs up some of the behind-the-scenes bargaining over the OECD list.

G20 declares door shut on tax havens
April 2 (Guardian) - The most dramatic crackdown on tax havens was unveiled by G20 leaders at their summit today, paving the way for the naming and shaming of countries that fail to comply with internationally agreed standards. (TJN notes progress, but is rather less enthusiastic.)

Petition on monetary reform
March (No 10) - We the undersigned petition the Prime Minister to Include international and national monetary reform on the G20 agenda for 2nd April. More details here. http://petitions.number10.gov.uk/G20moneyreform/#detail

http://www.lecourrier.ch/special/promotion/aab5f2ae3772a2e/LeCourrier_2009-03-30.pdf

US and Gibraltar agree to share tax information
April 1 (Guardian) - The clampdown on tax havens around the world gathered pace today when the US government and Gibraltar announced an agreement to exchange information on tax matters.

Liechtenstein tax deal edges closer as France begins fraud inquiry
April 1 (Guardian) - The crackdown on tax havens across the world intensified last night as Britain's most senior taxman flew to Switzerland to negotiate a deal that the Treasury hopes will force British companies to stop using bank accounts in Liechtenstein to avoid paying tax.

Michelin, Total, Adidas face money-laundering probe
March 31 (France24) - Tyre maker Michelin, oil firm Total and sports firm Adidas are suspected of evading French taxes via accounts in the Alpine principality of Liechtenstein, French prosecutors said on Tuesday.

“G192” ONLY CREDIBLE BODY TO BRING ABOUT REFORMS
March 6 (SUNS) - The "G192", namely, the entire membership of the United Nations General Assembly (UNGA), is the only credible group to bring about the necessary reforms of the 21st century, in the context of the current global economic and financial crises, the President of the Assembly declared Thursday.

France Hints at Leaving G-20 Summit
MARCH 31 (Reuters) - French Finance Minister Christine Lagarde said President Nicolas Sarkozy would walk away from this week's Group of 20 meeting in London if no progress was made on global financial regulations.

Brown backs new global assault on tax avoidance
April 5 (Observer) - Gordon Brown this weekend increased the likelihood of a co-ordinated global clampdown on aggressive tax avoidance by opening a new front against secret offshore financial centres.

Links - Feb 20

** Also see our searchable archive of past story summaries; and Offshore Watch. **

Germany Investigates Liechtenstein Prince Over Taxes, FTD Says
Feb. 20 (Bloomberg) -- State prosecutors in Germany are investigating Prince Max von und zu Liechtenstein over the evasion of German taxes, Financial Times Deutschland reported.

United States Asks Court to Enforce Summons for UBS Swiss Bank Account Records
Feb 19 (US DoJ) - The US government has filed a lawsuit today in Miami against UBS asking the court to order the bank to disclose to the IRS the identities of the bank's U.S. customers with secret Swiss accounts. According to the lawsuit, as many as 52,000 U.S. customers hid their UBS accounts from the government in violation of the tax laws; 20,000 involved securities, and 32,000 involved cash.

Bank Asks Offshore Clients to Sign Tax Forms
Feb 17 (NYTimes) - Credit Suisse, under a widening investigation into foreign banks with offshore private banking services, is working to avert a potential standoff with federal authorities like the one faced by the rival Swiss bank UBS.

A Swiss Bank Is Set to Open Its Secret Files
Feb 18 (NYTimes) - In the hush-hush world of Swiss banking, the unthinkable is happening: secrets are spilling into the open. “The Swiss are saying that this is the end of Swiss banking as they knew it,” said Jack Blum, an offshore tax specialist. “Nobody will trust the security of the Swiss bank account.”

Brown targets Switzerland in global tax haven crackdown
Feb 19 (Guardian) - A worldwide crackdown on tax havens, from Switzerland to the Cayman Islands, will be spearheaded by Gordon Brown as the world's richest nations use the global economic downturn to close loopholes that are costing them hundreds of billions in lost revenues. See also “Fox to lead global effort to tighten henhouse safety.”

UK tax-take to reveal depth of crisis
Feb 18 (FT) - A dramatic deterioration in the public finances is expected to be revealed on Thursday morning as official figures show extremely weak tax revenues in the crucial month of January and lay bare the cost of the government’s capital injections into Britain’s banks.

Swiss distraction on tax havens
Feb 20 (Guardian) - Gordon Brown's decision to target Switzerland on tax dodging is a diversion to distract from his failure to take action against Britain's tax havens (Brown targets Switzerland, 19 February). The UK plays a major role in helping companies dodge the tax they owe. By John Hilary. Just as we wrote in Fox to lead global effort to tighten henhouse safety.

Links - March 31

** Also see our searchable archive of past story summaries; and Offshore Watch. **

UK plans to ban use of offshore centres
March 30 (FT) - Banks operating in Britain will be banned from using tax havens if they sign up to a draft code of practice drawn up by the government to address a row over their aggressive tax planning. The code will only succeed if the government is able to persuade all banks, including UK branches of overseas banks, to sign up to it.

White House announces tax reform task force
March 25 (The Hill) - The Obama administration announced Wednesday that it is creating a task force to examine ways to simplify the tax code, close tax loopholes, lessen tax evasion and reduce corporate welfare.

Brown plans global scrutiny of tax havens
March 23 (Guardian) – ‘Tax havens will be forced to submit themselves to international scrutiny under plans to tackle their culture of secrecy being proposed by Gordon Brown.’

UEFA Considering Tax On Super-Rich Football Clubs
March 27 (Taxnews) - UEFA, the governing body for European football, has announced this week proposals to introduce a tax on big-money transfers in order to try to support struggling clubs forced into debt by their rich, often investor-backed, counterparts.

Sardinia To Scrap Wealth Tax Regime
March 27 (Tax News) - Sardinia’s new governor, Ugo Cappallacci, has announced this week that he is to retract his predecessor’s luxury tax regime. The sunny island off the coast of Italy, which hosts numerous VIPs and HNWIs, currently levies substantial taxes on private yacht and flight arrivals.

Brown snubbed over tax
March 29 (Times Online) – ‘GORDON BROWN’S carefully laid plans for a G20 deal on worldwide tax cuts have been scuppered by an eve-of-summit ambush by European leaders.’

UBS says Swiss tax move does not weaken it in U.S
March 27 (Reuters) – ‘UBS said on Thursday a decision by Switzerland and other offshore centers to cooperate more on tax evasion did not weaken the Swiss bank's stance in an ongoing U.S. tax dispute.’

Berlin Takes on the Tax Havens
March 27 (Spiegel) – ‘The German government is applying pressure on offshore tax havens. It is also taking action against German banks operating in Switzerland, where they maintain accounts for shadowy Liechtenstein foundations. In a time of economic crisis, Berlin needs all the tax euros it can get.’

Hell Nay, We Won’t Pay
March 27 (NY Times) – ‘Thanks to “Cracking the Code” which, by his count, has spawned “CtC Warrior” support groups in 48 states — author Peter Hendrickson has found, as he puts it, “a more productive” way to fight the income tax. Rather than mail a bomb to the I.R.S., he has taught thousands of Americans how to send the I.R.S. and state tax agencies what he calls “educated returns” — and what the I.R.S. calls fraudulent ones. A tale of tax deniers.

The mystery of the phantom 7236 clients of UBS
March (Le Temps) - ‘The documents delivered to the American courts by a former employee revealed that the bank has lost contact with thousands of customers. Ten years after the affair of the dormant, Switzerland has adopted no specific legislation on the subject.’

The Quiet Coup
May (The Atlantic) – ‘The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If we are to prevent a true depression, we’re running out of time.’

Switzerland: Lacking the Political Will
March (Le Temps) – ‘When the panel that I chair has submitted a bill in 2004, international pressure had disappeared. Switzerland kept the feeling of having been unjustly mistreated,’ said Luc Thévenoz, Professor of Law at Geneva University.

Zambia parliament approves scrapping windfall tax
March 28 (Reuters) – ‘Zambia's parliament has agreed to abolish a controversial 25 percent windfall tax to reduce pressure on foreign mining firms hit by the global financial crisis, Mines Minister Maxwell Mwale said on Saturday.’

Island ‘likely to escape’ G20 blacklist inclusion
March 26 (This Is Guernsey) – ‘GUERNSEY is set to reach the finish line in its efforts to escape being blacklisted by the G20, the chief minister believes.’

FACTBOX: What is the G20?
(Reuters) - Leaders of the G20 major economies are due to meet in London on Thursday to review progress in tackling the biggest economic crisis since the 1930s. Following are some details of the group's origins and achievements so far.

Tax havens feel the heat
March 30 (FT) - Officials are exploring the possibility of moving negotiations on information exchange on to a multilateral basis. Developing countries are acutely aware of how much tax revenue they lose to evasion. “I don’t think it’s overstating it to say it’s the dawn of a new era” said John Riches, deputy chairman of STEP Worldwide, a professional body for wealth advisers.

Swiss to give Britain bank papers in bribery case
March 30 (AP) - Swiss authorities will provide bank account details to Britain in a multimillion dollar Nigeria bribery case involving a subsidiary of Halliburton Co., court rulings said Monday.

Combating Global Climate Change: Why a Carbon Tax is a Better Response to Global Warming than Cap and Trade
March (Stanford Environmental Law Journal) - A carbon tax could be implemented and enforced without the need for a complex new regulatory scheme and would provide an immediate carbon price signal. In addition, revenue from a carbon tax could support research and development of alternative energy and ease any regressive effects of the tax.

Swiss To Sign Model Treaty With US, Japan,
March 29 (Tax News) - Swiss Finance Minister Hans-Rudolf Merz has underlined Switzerland’s strategy in conforming to OECD’s standards through the signing of double tax agreements, providing for the exchange of information upon request. It is understood that the first two revised treaties will be signed with Japan and the US.

China Implements Measures To Combat Tax Evasion
March 29 (Tax News) - The Chinese State Administration of Taxation has removed tax privileges afforded under various double taxation treaties to foreign investors who misuse the system of 'special purpose vehicles' as a means of reducing their tax liabilities or circumventing exchange controls.

French Parliament Rejects Proposal To Tax The Rich
March 29 (Tax News) - Members of France’s National Assembly have nevertheless voted to reject four amendments to the much trumpeted “bouclier fiscal” or tax shield, including proposals to “suspend” the tax shield for 2009 income, and to increase tax on high-income earners, as a sign of solidarity in a time of crisis.

BREAKING NEWS - Britain writes to its tax havens

Update 1: The Guardian and FT now cover this story. Read it here and here.
Update 2: Richard Murphy has now added his analysis here.

We have just received copies of letters to the British tax havens from No. 10, Downing Street (for non-British readers, that's the British Prime Minster's office.)

We now have access to two examples of letters sent by Gordon Brown today to the heads of governments of Britain's Crown Dependencies and Overseas Territories. The two letters are to the chief minister of Jersey, and to the Premier of the British Virgin Islands. The letters are here (BVI) and here (Jersey.) TJN is extremely encouraged by the content of these letters, notwithstanding the diplomatic language in which the points are made. We single out these points:

• (from the Jersey letter) "As international efforts on harmful tax practices start to refocus on the issue of tax avoidance, it will be vital to the interests of the Crown Dependencies that they can readily meet any new international standards which emerge." (our emphasis)
  TJN comment: this is by far the bigger issue over and above tax evasion, because tax avoidance has been the veil behind which a vast industry has developed with tax havens as their focus. This is a strong signal to the tax havens that avoidance will no longer be treated as a legitimate activity. Prepare your Plan Bs.
  
• (from the Jersey letter) I welcome the progress which has already been made by the Crown Dependencies in meeting the OECD target of 12 TIEAs. This standard should be seen as an indicator of commitment to the principle of tax transparency. I think it is particularly important that the Crown Dependencies continue to set the pace in this process and put clear water between themselves and those jurisdictions which only just meet the international standard. If genuine progress in agreeing, implementing and abiding by these agreements does not continue to be made I will encourage the G20 to look at this issue again until all abide by the highest standards.
  TJN comment: that last sentence is rather strong medicine, in diplomatic terms. We say to the tax havens: don't just sign agreements with minor jurisdictions like Greenland or the Faroe Islands, in order to fluff up the numbers. Start serious negotiations with serious major developing nations, and make it clear that you are commitment to implementing the agreements without putting up artificially high judicial barriers. TJN will continue to pursue the line that a real commmitment to tax transparency will entail signing up hook, line and sinker to a reformed version of the EU Savings Tax Directive. No witholding taxes, no secrecy exemptions for trusts, and so on.
  
• (From the BVI letter,) "Given the developments at G20 and, in particular, the identification of a tool box of sanctions which will be applied against those who do not meet the international standard, I urge you to achieve the standard of 12 TIEAs or equivalent before the UN General Assembly meeting in September. "
  TJN comment: and that is just the starting point. We note that in the final paragraph, Brown reiterates the point about tax avoidance. Note, also, that the time reference point is the UN meeting, not the next G20. This is good - the United Nations is the body with the right global legitimacy to take this on - it is not a narrow club like the OECD or the G20. Read more here.
  
• (From the BVI letter.) I agreed with the other G20 leaders that international co-operation is necessary in a number of areas. One of these areas was on improved co-operation in the exchange of tax information, and ensuring that all jurisdictions meet internationally recognised standards on tax transparency.
  TJN comment: this reinforces the case for TJN's position that this is a high, if not the highest, priority. The British Prime Minister confirms that here.
  
• (from the BVI letter.) It is particularly important that all Territories build on the current momentum and work towards meeting the international standard swiftly on the basis of agreements with the major nations represented in the G20, the EU and the OECD.
  TJN comment: note that the British Premier is not choosing between the EU and the OECD model here in terms of international standards. We insist that the required standard is a full multilateral, automatic, all-encompassing exchange of information arrangement. See more here.
  

Feedback we are receiving, and the above points, give us grounds for believing that Gordon Brown has accepted TJN's position that tax havens have a negative impact on poor countries, and on the need for multilateral, not bilateral solutions, as well as on the broad notion of tax transparency. Reading between the lines, we think they should be interested in focusing not just on bank accounts and bank secrecy, but also the tax arrangements of trusts, accounting standards and so on, and in seeking new ways to tax corporations effectively, without the beggar-thy-neighbour framework of tax havens getting in the way. Paraphrasing what we recently noted, tax avoidance is to democracy what pollution is to the environment.

The letters also mention the Foot Review, which is supposed to be reporting on Britain's Crown Dependencies and Overseas Territories by the end of this year. This review needs to be very ambitious in scope, looking at how this issue not only affects Britain directly, but also looks at how it affects the global economy, which is in Britain’s long-term interest. Foot must also focus on regulatory issues, of course, and look specifically at how individual havens can make a transition to a post-tax haven economy. See more on this here.

A last point. The above letters are words, and we cannot take anything for granted. We hope Brown will follow up forcefully. We will be watching.

Links - March 9

** Also see our searchable archive of past story summaries; and Offshore Watch. **

Jersey visitors on 12th - 13th March - Wish You Were Here
March 9 (TJN) - On 12th/13th March 2009 civil society organisations from across Europe, including some of the largest economic justice coalitions, will be visiting Jersey. This provides essential background and links, and an invitation.

Inequality and the spirit level
March 8 (TJN) – Book review from The Economist. "Within the rich world, where destitution is rare, countries where incomes are more evenly distributed have longer-lived citizens and lower rates of obesity, delinquency, depression and teenage pregnancy than richer countries where wealth is more concentrated."

The cat is out of the bag
March 8 (TJN) - Gordon Brown also has a choice: to act against tax havens or limit himself to empty rhetoric. He would like to be thought of as a long-standing champion of global financial regulation. The reality is that, by what happens at the G-20 summit, he will be judged a late convert at best, otherwise a hypocrite."

Bono and the tax justice debate in Ireland
The controversey surrounding U2's tax affairs has generated a huge discussion in Ireland on economic justice issues. Jamie Drummond, from Bono's agency DATA, has stirred the pot by trying to shift the focus away from tax avoidance to tax evasion, but the public response suggests that this ploy has not worked - as the following selection of letters suggests.

Sanctions on secrecy jurisdictions
March 6 (Tax Research) - I think there are two forms of sanction available. One is the head on attack like the Stop Tax Haven Abuse Act. Germany is also looking at arrangements like this in draft legislation published in January. The second group might be described as ‘work-round’ sanctions: measures that will neuter the impact of tax havens with out directly confronting them.

Brown does a U-turn on tax havens with blacklist
March 8 (Observer) – Gordon Brown is preparing to unveil a blacklist of harmful tax havens to be published before the crucial London G20 meeting next month. The list is expected to include offshore centres linked to Britain, including the Cayman Islands and Bermuda.

Tax haven bankers vow to keep their secrets
March 6 (Euronews) - Three major European countries with banking secrecy laws have warned against any attempt by the G20 group of nations to place them on a tax haven blacklist. A G20 summit is due next month and tackling tax avoidance is on the agenda, but Switzerland, Luxembourg and Austria are not members. They have vowed to protect their practices

UBS says had 47K accounts for Americans
March 4 (AP) -- UBS AG now says it had about 47,000 accounts held by Americans who didn't pay U.S. taxes on their assets, but Switzerland's biggest bank is providing the names of only 300 American clients to the U.S. government in a showdown over secrecy.

Jersey raises floodwalls as tax storm brews
March 8 (Reuters) - Jersey's village-like capital features many of the brands typically found in any British town: Ladbrokes betting shop, retailer Marks and Spencer and Boots the drugstore. But step down a side street on this plush island off the French coast, and almost every other building bears the name of a private equity, wealth management, or banking firm.

Credit Suisse targets wealthiest Mexicans
March 5 (Reuters) - Credit Suisse said on Thursday it is launching a private banking business in Mexico to manage investments for the country's rich, a segment it says is growing, despite a slumping economy.

Swiss keen to decouple secrecy and tax evasion:
Match 7 (Swissinfo) - Finance Minister Hans-Rudolf Merz has issued the strongest hint yet that Switzerland might change its view on tax evasion in order to preserve banking secrecy.

Brits looking for possible Madoff money laundering
March 6 (Newsday) - British fraud investigators are probing the activities of accused Wall Street scammer Bernard Madoff's London office for possible money laundering, a law enforcement source said Thursday.

Panama a poster child for tax evasion
March 6 (Panama Star) - The attack on Panama’s tax haven reputation and with it the potential Free Trade Agreement (FTA) continues. A civil organization called Public Citizen’s Global Trade Watch Division has joined the list of Panama’s detractors and sent a letter to the US House of Representative on March 3, in which it launched a vitriolic attack against the FTA between the two countries.

Solicitor Held in U.S. Charge of Involvement in Nigeria Bribery
March 6 (Guardian) - A British solicitor was arrested yesterday over allegations that he broke US anti-corruption laws by channelling millions of pounds in bribes to Nigerian officials to win construction contracts.

Obama bid to stamp out tax havens
March 5 (Guardian) - The world's most secretive tax havens are to be prised open after Barack Obama's new administration endorsed far-reaching legislation to crack down on them.

UBS Executives May Face Prosecution in Tax Evasion Inquiry
March 5 (New York Times) - In testimony before a Senate subcommittee, a top Justice Department official said the agency might prosecute senior UBS executives as part of its investigation into whether the Swiss bank helped scores of wealthy Americans evade billions of dollars in taxes.

US charges two Britons with bribes in KBR venture
March 5 (Reuters) - Two British citizens face charges of bribing Nigerian officials as part of a joint venture that included KBR Inc to build liquefied natural gas facilities, the U.S. Justice Department said on Thursday. Jeffrey Tesler was arrested in London on Thursday, the same day as the indictment handed down in February was made public, the department said. Former KBR employee Wojciech Chodan, of England, was being sought on a U.S. arrest warrant. The department said it was seeking extradition of the suspects, and forfeiture of $130 million from the two. KBR, a former engineering subsidiary of Halliburton Co pleaded guilty last month to federal charges that it paid $180 million in bribes to Nigerian officials.

Morgan Stanley’s Chinese Land Scandal
March 1 (NY Times) - SHANGHAI — Since the height of China’s property boom, Morgan Stanley’s huge real estate deals here have been the envy of the industry. Then, scandal hit. Last month, with property prices here and elsewhere in free fall, the bank dropped a bombshell: in a Securities and Exchange Commission filing, it said it had fired an executive in its China real estate division after uncovering evidence that he might have violated the United States Foreign Corrupt Practices Act, which bars American business people from bribing foreign officials.

IRS Eyes Wider Net to Catch Tax Cheats
March 4 (Reuters) - The U.S. Internal Revenue Service may team up with other governments to crack down on tax cheats as it faces pressure to toughen rules on Americans who try to conceal income at offshore tax havens, a senior IRS lawyer told Reuters on Tuesday.

EU says it could sanction tax havens
March 4 (AP) - The European Union could sanction tax haven states that refuse to share information on tax evasion and money laundering, the EU's Commission President said Wednesday. Jose Manuel Barroso said "it should be possible for us to apply penalties" against countries that don't cooperate with European tax authorities or financial supervisors. "All financial entities should be subject to a certain degree of supervision." He said the EU would propose new rules on banking supervision by the end of May and new laws for hedge funds, private equity funds and executive payments by the end of April.

UBS Case Shows Need to Bolster Offshore Bank Laws
March 4 (Bloomberg) -- UBS AG’s refusal to surrender the names of as many as 52,000 Americans suspected of using Switzerland’s largest bank to avoid taxes shows that a U.S. tax treaty with that country is ineffective, a top Senate Democrat said.

US names Antigua and Barbuda among major money laundering jurisdictions
March 3 (Antigua Sun) – The United States has named four Caribbean Community (Caricom) member states among 59 major money laundering jurisdictions. In its 2009 International Narcotics Control Strategy Report, the State Department identified Antigua and Barbuda, the Bahamas, Belize and Haiti among “jurisdictions of primary concern.”

BAE Lobbyist Arrested on Jet Bribery Probe Placed in Custody
March 1 (Bloomberg) - A BAE Systems Plc lobbyist arrested in Austria on suspicion of bribing officials in Hungary and the Czech Republic to win contracts for Europe’s biggest defense company has been held in custody.

Salmond’s top economic adviser uses Cayman Islands tax haven
Mar 3 (Sunday Herald) – The chief economic adviser of Alex Salmond, the First Minister of Scotland, is at the centre of a tax avoidance row after it emerged that his investment group's hedge fund is running businesses from a tax haven.

Challenge of recession to aggressive transfer pricing
Feb 6 (The Hindu) - Across the globe, there has been a substantial increase in transfer pricing (TP) audits and disputes, observes Mr Rohan K. Phatarphekar, Executive Director & National Head, Global Transfer Pricing Services, KPMG India.

Bribery and corruption
Mar 1 (Thought Leader) - Why corruption became institutionalized at Siemens.

It's hypocrisy to leave British tax havens open
Observer weighs in on the case for G-20 to tackle secrecy jurisdictions:

President Obama's First Budget: Not Perfect, But a Massive Improvement Over the Recent Past


March (CTJ) - Thursday, President Obama sent his budget blueprint to Congress. While many of the details remain to be seen, it's the most progressive budget we've seen in years. It's also a more honest budget than the last administration ever proposed.

Tax haven for German ICT firms to disappear
Nov 12 (The Register) - Does Norderfriedrichskoog really need an IT company to serve a community of just 47 inhabitants and a dozen thatched homesteads 200 kilometres north of Hamburg ? Well, yes. According to the Offshore Financial Review, it is the world's most unfashionable tax haven. The village (with only two streets) levies no trade tax, thanks to a decree issued 300 years ago by a local duke.

The cat is out of the bag

The G-20 summit is imminent.

Political leaders from many of the world's largest and most politically (and militarily) powerful nations will be converging on London at the beginning of April to consider a once in a lifetime opportunity to make the world a saner, safer and fairer planet. They will be closely scrutinised by a large and sceptical public, not just in London, but across the planet.

It is clear that one of their agenda items -- high on the priority list -- will be secrecy jurisdictions. G-20 president Gordon Brown made this clear when he addressed the US Congress earlier this week, posing the rhetorical question: how much safer would we be "if the whole world finally came together to outlaw shadow banking systems and offshore tax havens." Interestingly, the prime minister received a particularly loud standing ovation at that stage, demonstrating that this is a live issue in the Democrat controlled Congress.

When he used the term "safer" Prime Minister Brown was referring to the safety of our savings, but the dangers posed by secrecy jurisdictions extend way beyond the safety of mere money. These places have been undermining national tax regimes for decades. They have been used as a tool for degrading regulation and the effectiveness of regulators. They have been boltholes for criminals, kleptocrats and banksters, offering secrecy to all manners of economic crime. With virtual impunity they have challenged judicial systems and democracy itself.

Today's lead editorial in Britain's influential Observer newspaper doesn't mince its words about the havoc that these places have caused: "secrecy jurisdictions" (this term is finally catching on) are where the "profits of legal activity, the spoils of fraud, terrorism, drug trafficking and plunder by despotic regimes are hidden. That is the company that global businesses keep when they operate offshore."

For decades the global business community, and their over-paid tax lawyers and accountants, have worked the offshore system to their great advantage. Secrecy jurisdictions have been the dirty little secret, shared by an unholy alliance of crooks, politicians, business people and assorted cronies. They have been protected by powerful nations and subservient media. Politicians, economists, and think-tanks have turned a blind eye to their activities, or worse, have acted as their shills. Some still do.

But the cat is out of the bag. Many of the world's political leaders have recognised the importance of taking action now. The G-20 must now take action. But as The Observer concludes in its editorial today:

"Gordon Brown also has a choice: to act against tax havens or limit himself to empty rhetoric. He would like to be thought of as a long-standing champion of global financial regulation. The reality is that, by what happens at the G-20 summit, he will be judged a late convert at best, otherwise a hypocrite."

The future security of more than our savings depends on the outcome of the G-20 summit. Democratic forms of government will come under immense pressure in the coming years as the economic crisis deepens and the totalitarians come out of the shadows. Outlawing the secrecy jurisdictions, including all the satellites of the City of London, will demonstrate a real commitment to tackling secrecy, corruption and regulatory degradation. We demand nothing less.

UK fraud office halts Kenya probe

From the BBC:

"The United Kingdom's Serious Fraud Office (SFO) has terminated its probe into the "Anglo Leasing affair", one of Kenya's biggest corruption cases.

The SFO said it halted the probe into $100m contracts with the phantom Anglo Leasing Finance firm after Kenya failed to produce evidence to try suspects. But the Kenyan justice minister has told the BBC that British laws favour those who are involved in corruption.

"Its unfortunate but I also know that the laws in their country actually favour those who have stashed their money away. But I'm not excusing our ineptitude as a nation," Martha Karua said.

The SFO began its probe in July 2007, and was investigating offshore accounts in the British tax havens of Jersey and Guernsey."

Whatever could he mean about British laws? Take a look at this transcript from a 2006 interview with Ngozi Okonjo-Iweala, Nigeria's former finance minister, about repatriating stolen assets.

Q: How are things progressing with the repatriation of money filched by former officials and stored in Western banks. I hear the Swiss authorities have become very helpful, unlike the British.

Ngozi: The Swiss have now returned $500 million of stolen resources. Switzerland has set the example.

Q: What about the British?

She gives a long throaty chuckle

Ngozi: Now heaven help me. It's very hard to condemn the British. On debt relief the UK has set the example. Britain has done us proud, especially Gordon Brown who worked immensely hard negotiating with the G8 finance ministers. We needed someone round that table who was in our corner and Gordon Brown did that job.

Q: So why are the British dragging their feet on the repatriation of stolen resources?

Ngozi: It's been more difficult with the British. Our president has raised it many times with Prime Minister Blair. Eventually he returned $3m. We understand there are other monies but while all the discussion was going on those monies left the country and went somewhere else. The UK says it has all these laws. . . but in the end they managed to return us a little bit."

There you have it, in a nutshell. Britain is unusually culpable for the big dirty secret of foreign aid: for every dollar that we have been sending to developing countries in foreign aid, we take back an estimated ten dollars, under the table.

The Litmus Test of the End of Tax Havens Agenda

Oh dearie me. This does not look good. We hear this afternoon that British Prime Minister Gordon Brown and German Chancellor Angela Merkel, whilst agreeing on the need to tackle tax evasion through tax information exchange agreements (TIEAs), have failed to pluck up sufficient courage to push for a multilateral approach as a more effective substitute for the weak and ineffective 'by request' model.

Come on guys, try harder. The upcoming G-20 provides the best opportunity since 1944 to get it right. We all know that bilateral information exchange treaties are sub-prime, not just because of the barriers that places like Jersey put in their way, but also because of the cost, time delays, and general obstructiveness of the tax havens. Whilst the evidence of the recent past suggests that TIEAs have little or no deterrent effect on tax evading activities, it is also clear that the tax havens find these worthless bits of paper a useful artifice to hide their business as usual agenda.

Let's be clear. We do not support this diluted approach to tackling tax evasion. We have clearly laid our proposals to the G-20 leaders here and these proposals were delivered straight to Gordon Brown's team when we visited No.10, Downing Street recently. Our eventual assessment of the success or otherwise of the G-20 summit will revolve around issues like this. Anything less than a genuine commitment to a multilateral process based on automatic information exchange will be seen as a failure. This is one of our litmus tests of the political will to get it right and take genuine steps towards ending the tax havens.

Gordon Brown: Mister Fox' transcript

Following our earlier blog about tax havens, we have found a little more substance on what UK Prime Minister Gordon Brown actually said.

First, there are a number of words which seem to be exactly what we'd like to hear. Such as:

"We are fashioning for the future a global deal, a grand bargain where each continent accepts its responsibility and its obligations to act to deal with what is a global problem that can only be solved with a global solution."

Nothing new there, but it's the right thing to say.

"We must persuade the whole of the world to take action and that will include action against regulatory and tax havens in parts of the world which have escaped the regulatory attention that they need."

Again, the right thing to say - and we do like his use of the term "regulatory and tax havens."

"We have got to think the previously unthinkable, we have got to do what was previously undoable, the cooperation that is needed round the world is not something that has been achieved before but I believe it can be achieved to meet the needs of our times."

We agree, again. But then he starts criticising the U.S. system, and adds this:

"I am very happy to say that our regulatory system has been a better system but it is still not good enough to meet the changing challenges of the times. . . . . We created the right framework, a unified regulator, we actually monitored companies across all their different activities and not just their insurance activities or their banking activities, but we have got to learn the lessons of what has happened around the world."

So just what kind of regulation is he talking about? Note, too, that he rather dodged this question:

Question: "You said in your earlier remarks that the new regulatory system would have to have jurisdiction in all jurisdictions, including tax havens. Can I ask which ones do you have in mind, are they ones that come under the UK Crown, Jersey, Guernsey and the Isle of Man, or is it more the Cayman Islands and Lichtenstein? And under this new regulatory system how much more tax revenue from those tax havens do you hope to get for HMRC?"

Then, finally, we note that he gives away this:

"I have been pressing for what is necessary, an international system of regulation, for ten years."

Ah yes, so we've noticed, Mister Fox.