Saturday, March 14, 2009

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.


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