It is in the UK's power to end tax havens

Cameron needs to lead on tax dodging, because he has the power to stop it.

Tomorrow, David Cameron will be welcoming senior ministers from some of the UK’s tropical isles to London for a high level summit. Despite these jurisdictions’ sandy beaches and sunny weather the talk will be of tax, not tourism, as the likes of Bermuda, the Cayman Islands and the British Virgin Islands rank as some of the most significant tax havens in the world.

Cameron’s grand plan is to invite these jurisdictions to sign up to an international treaty on cooperation and information sharing with other countries tax authorities. Cameron is keen to show that the UK is committed to getting its house in order ahead of the G8 summit in Northern Ireland next week. With a huge domestic backlash at home over tax dodging by companies like Google, Amazon and Starbucks, Cameron is hoping the appearance of leadership on the global stage can win some positive headlines at home.

But show and appearance is all we will see over the next few days. The treaty Cameron is asking British tax havens to sign only tinkers around the edges of their secrecy. It will still leave the UK running many of the world’s most significant tax havens. That the government continues to allow multinational companies and rich individuals to use the UK’s tax havens to dodge taxes around the world, robbing the world’s poorest countries of vital revenue, is a scandal of truly epic proportions.

Experts from the Tax Justice Network have criticised this treaty for falling short of what would be needed to break open their secrecy. For a start it only requires jurisdictions to share information when they receive requests from other countries’ tax authorities, rather than automatically and routinely sharing information. Neither does it require tax havens to actually collect information on rich individuals and companies that shelter their money offshore. 

It is not entirely surprising the treaty is not exactly watertight. It is drafted by the OECD, a Paris-based think tank, comprising 34 of the world’s richest countries, tasked with setting the standards for international tax rules: a body that has steadfastly resisted any major change to those rules for over a decade.

At the 2009 G20 summit, when Gordon Brown famously hailed the “beginning of the end for tax havens”, the OECD was tasked with producing a ‘blacklist’ of uncooperative tax havens. So rigorous were the rules for this list that within one week there was not one country on the list.

However, the failure to reign in Britain’s tax havens is not one of diplomacy. It reflects a total lack of political ambition. The simple fact is that these islands are not separate sovereign countries and Cameron does not need to negotiate with them. They are in fact British territories, and the UK government has the power to legislate for them.

Cameron could simply abolish the UK’s tax havens by passing a law requiring them to end their secrecy, establish rigorous financial regulation and making profits and wealth their subject to effective taxes. 

The government has acted in the past to enforce laws on these island jurisdictions before, abolishing the death penalty for Britain’s Caribbean Islands in 1991 and as recently as the year 2000, acting to decriminalise homosexual acts in the Cayman Islands. 

The British government has even acknowledged its full ability to enforce financial regulation on the UK’s tax havens. The OECD noted in a 2012 report (pdf) “the UK acknowledged that – from a constitutional perspective the UK has unlimited power to legislate for the OTs [Overseas Territories]”. 

Cameron has tried to make huge political capital of talking tough on tax. Last year Cameron announced his intention to tackle tax havens during his G8 presidency with huge fanfare, saying: “There are too many tax havens, too many places where people and businesses manage to avoid paying taxes.” Again in Davos at the World Economic Forum the bold rhetoric was out in force, stealing lines from UK Uncut, when he told businesses that “carry on dodging their fair share” to “wake up and smell the coffee”.

To have any hope of living up to his tough tax talk, Cameron must legislate to abolish Britain’s tax havens. He is fully capable of closing down these tax havens, but is just choosing not to.

Grand Cayman. Photograph: Getty Images

Murray Worthy is an economic justice campaigner for War on Want.

Photo: Getty
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Why Labour's rise could threaten Nicola Sturgeon's independence dream

As the First Minister shelves plans for a second vote, does she join the list of politicians who bet on an anti-Brexit dividend that failed to materialise?

The nights are getting longer, and so are generations. The independence referendum sequel will happen after, not before the Brexit process is complete, Nicola Sturgeon announced yesterday.

It means that Scottish Remainers will not have the opportunity to seamlessly move from being part of a United Kingdom in the European Union to an independent Scotland in the European Union. Because of the ongoing drama surrounding Theresa May, we've lost sight of what a bad night the SNP had on 8 June. Not just because they lost 21 of the 56 seats they were defending, including that of their leader in Westminster, Angus Robertson, and their former leader, Alex Salmond. They also have no truly safe seats left – having gone from the average SNP MP sitting on a majority of more than 10,000 to an average of just 2,521.

As Sturgeon conceded in her statement, there is an element of referendum fatigue in Scotland, which contributed to the loss. Does she now join the list of politicians – Tim Farron being one, and Owen Smith the other – who bet on an anti-Brexit dividend that failed to materialise?

I'm not so sure. Of all the shocks on election night, what happened to the SNP was in many ways the least surprising and most long-advertised. We knew from the 2016 Holyrood elections – before the SNP had committed to a referendum by March 2019 – that No voters were getting better at voting tactically to defeat the SNP, which was helping all the Unionist parties outperform their vote share. We saw that in the local elections earlier this year, too. We knew, too, that the biggest beneficiaries of that shift were the Scottish Conservatives.

So in many ways, what happened at the election was part of a bigger trend that Sturgeon was betting on a wave of anger at the Brexit vote. If we get a bad Brexit deal, or worse, no deal at all, then it may turn out that Sturgeon's problem was simply that this election came a little too early.

The bigger problem for the Yes side isn't what happened to the SNP's MPs – they can undo that with a strong showing at the Holyrood elections in 2021 or at Westminster in 2022. The big problem is what happened to the Labour Party across the United Kingdom.

One of Better Together's big advantages in 2014 is that, regardless of whether you voted for the Conservatives, the Liberal Democrats or the Labour Party, if you believed the polls, you had a pretty reasonable expectation that your type of politics would be represented in the government of Britain sometime soon.

For the last two years, the polls, local elections and by-elections have all suggested that the only people in Scotland who could have that expectation were Conservatives. Bluntly: the day after the local elections, Labour and the Liberal Democrats looked to be decades from power, and the best way to get a centre-left government looked to be a Yes vote. The day after the general election, both parties could hope to be in government within six months.

As Tommy Sheppard, the SNP MP for Edinburgh East, observed in a smart column for the Herald after the election, one of the reasons why the SNP lost votes was that Corbyn's manifesto took some of the optimistic vote that they gobbled up in 2014 and 2015.

And while Brexit may yet sour enough to make Nicola Sturgeon's second referendum more appealing on that ground, the transformation in Labour's position over the course of the election campaign is a much bigger problem for the SNP.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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