(Some) Tax Havens to open their books, but…

02.05.2013 - Silvia Swinden

This post is also available in: French, Italian

(Some) Tax Havens to open their books, but…
(Image by Composite Wikimedia Commons)

A number of British overseas territories that function as Tax Havens have agreed to a higher level of transparency opening their books to the UK, France, Germany, Italy and Spain. “In a statement, the [UK] Treasury said that Anguilla, Bermuda, the British Virgin Islands, Montserrat and the Turks and Caicos Islands have agreed to much greater levels of transparency of bank accounts held in those jurisdictions, following on from a similar agreement signed by the Cayman Islands”. (The Guardian). The move follows a US deal to tackle overseas tax evasion known as the Foreign Account Tax Compliance Act. President Hollande of France has been driving a similar initiative and Luxemburg, another powerful Tax Haven, has also stated its intention to comply with the higher transparency culture.

A 2012 motion in the British Parliament had already pointed out “That this House notes the OECD and G20’s identification of the role of tax havens by wealthy corporations in fuelling the global economic crisis from 2009 onwards”. The main problem with this deal is that the most powerful companies’ owners and directors using such resources do not open bank accounts in their own names but rather they use Trusts and other fronts to avoid their real names appearing registered. So the move may affect only some rich individuals who simply looked in the web for an “Offshore Tax Havens >> List of the World’s Best 2012/13” rather than Corporations with a large team dedicated to finding loopholes and hiding their assets.

The good faith of Governments apparently seeking to recoup the billions lost in taxes through Tax Havens, whilst applying draconian austerity measures, can be safely put in doubt in the light of the secret agreements they make with specific companies (connected to their own politicians’ funding, as we reported in the past) to relieve them of their tax duties. Such is the case of an agreement between Goldman Sachs and the British Government, at present being taken to Court to prove its illegality by the UK Uncut Legal Action team. “Dave Hartnett – HMRC’s chief tax man – met Goldman Sachs’ top brass in late 2010 and, with a handshake, agreed that the banking giant would be let off paying up to £20 million in tax. We believe that £20 million was money owed to the public purse and could pay for vital public services and welfare, which is why we are taking legal action to have the deal declared unlawful.”

Why Now?

We live in a closed economic system and the cracks are becoming visible. Already in 2012 the leaders of the International Monetary Fund, the World Bank and the World Trade Organisation warned that austerity measures were creating dangerous levels of unemployment and inequality. Being who they are, they saw the biggest threat in protectionism rather than social explosions or the (already under way) rise in neo-fascist movements. Confronted with the real prospect of another, and maybe much deeper, or even final, economic catastrophe the World Bank has finally lent a ear to the Tax Justice Network about the need to claw back some of the (estimated between) US$13 to 26 trillion sitting untaxable and unaccountable for in offshore banking institutions. Well, not all are that offshore. In fact the City of London and many other financial centres function as Tax Havens.

Whilst this new move towards opening (some) Tax Havens to (some) Governments may help keep the system going a bit longer, the most important thing is to concentrate on the new one being born through people-centred, rather than money-centred, alternative economic forms. Pressenza’s presentation at the Deutsche Welle Global Media Forum in June will be doing precisely that and we shall report on what is really new and wonderful, and opening the future.

 

 

 

Categories: Economics, International
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