An end to tax evasion in developing countries is an ongoing aim of the IF Campaign that VinB was proud to support all the way to Hyde Park. Now we are wondering where things are up to on the home front.
The PM played a key role in highlighting the effects of corporate tax evasion on developing countries that culminated in the G8 countries agreeing some broad principles for the way forward. All the while, amid the huffing and puffing and high minded indignation that caught the headlines ministers were putting in place an array of tax breaks and sweetners. One being the so called Black Box tax breaks designed to attract research and development companies to the UK and last week it was announced that home grown mining company Cuadrilla are to receive tax breaks for shale gas extraction. Not forgetting of course the planned annual reduction of Corporation Tax down to 20%. One cannot but wonder about the credibility that will be attributed to the UK by fellow G8/20 members given the gap between our rhetoric and action.
On a slightly more positive note Business Minister Vince Cable has just published a discussion document on proposals to increase company transparency, though it is criticized as being too wishy-washy. Hope is at hand with the more meaty United Kingdom Corporate and Individual Tax and Financial Transparency Bill introduced by Labour minister, Michael Meacher, and which has its second reading in September.
It will be interesting to see what amendments are made to the Bill given the likely conflict of interests amongst the MP’s and pressure from business lobbying groups. Reforming taxation is an eye watering task given its huge complexity. Some would say better to start again than try to fix something that is broken.
If this is the best we get from Lough Erne then the government’s best is not good enough by a long way. Richard Murphy
Yesterday, Vince Cable presented a discussion paper with proposals for enhancing the transparency of UK company ownership and increasing trust in UK business. The move, meant to indicate that the government is moving forward with the G8 Tax Declaration, has drawn criticism from tax reform guru Richard Murphy who reads the proposals as the Secretary’s failure to step up to the mark with effective reforms to the system. Meanwhile, the City of London described by some as the one of the world leaders in tax havens is busy with its own schemes!
If you haven’t had chance to read the numerous communications from the G8 summit at Lough Erne this week, then for starters, have a look at the Tax declaration (with a little hint towards land grabbing … declaration 7, just in case you miss it). Have you read it? Now re-read but this time replace every ‘should’ with ‘will’ and you will (no pun intended) get a feel for what we were hoping to hear!
What others are saying …
ENOUGH FOOD FOR EVERYONE IF
The public argument for a crackdown on tax dodging has been won, but the political battle remains. Future G8s and G20s must urgently finish the job. Sally Copley (article)
The G8 has asked all the right questions but has been thin on answers… (it’s) woken up and smelled the coffee but has failed to agree a tax deal that helps the poorest countries. Until this happens lives are on the line. This year has been a warning to tax dodgers that their days of ripping off rich and poor countries alike are numbered. But tax dodging is a dark stain that needs more than a quick wash, and the G8 must agree a plan to get the global tax system whiter than white this year. (article)
Transparency and access to information for the people CAFOD works for in the poorest countries will mean they have the chance to ensure companies and governments can be held to account, increasing pressure for money flows to deliver for the poorest communities and to support changes in the global food system that at present keeps 1 in 8 people hungry. (article)
TAX RESEARCH UK
So there are no positive commitments to do anything. That’s incredibly weak.
UK OVERSEAS DEVELOPMENT INSTITUTE
We were promised a bang, but this is a whimper. It is simply a wish list.
The conspicuous lack of detail and glaring omissions in the G8 communique on Tax justice is disappointing, but lets take heart that the issues of tax evasion and avoidance are now established in the public domain and recognised as part of the solution to eradicating hunger and poverty.
What next: VinB will be stepping up the campaign, canvassing supporters, publicising the injustices, reporting on progress and supporting the development agencies in keeping pressure on the G8 leaders to make progress on their promises.
An estimated $8.5 trillion sits in offshore accounts, none of which draws tax revenue back to the source of the wealth.
Reaching International agreements to bring an end to this state of affairs is incredibly ambitious. Despite the challenge, the current economic climate and the G8’s declining influence on the world stage, I am optimistic that the G8 can make a start on delivering corporate tax reform.
Green shoots of which we have already seen as David Cameron, despite the cynicism regarding his motives, has increased his credibility and proven his determination to make meaningful reforms, starting with home improvements .
First on the list the British Overseas Territories, many of which (like London) have functioned as tax havens. In fact one in five of the global tax havens come under UK responsibility. At Downing Street on Saturday they reached agreements on how to share revenue reporting and track company ownership behind the brass nameplates. Many other tax havens are within the jurisdiction of G8 countries.
The G8 Summit not least has acted as a focus for campaign groups, has kept the need for corporate tax reform in the mainstream news and raised public awarenessof tax injustice in developing countries.
The IF campaign reports;
Developing countries would lose $1.4bn in illicit flows during the two days of the summit – enough to provide farmers in Indonesia to feed themselves and their families for a year.
If the G8 countries go further and give developing countries access to corporate information a real impact on eradicating one of the causes of hunger and poverty could be achieved and the G8 would show that it is not dead yet.
George Osborne has been hosting a meeting of the G7 Finance ministers and I wonder if they got round to tackling the elephant in the room?
Hopefully the elephant that was placed in the lobby of the treasury department will help to remind him that it is time to tackle Britain’s share of the world’s tax havens (according to Chris Jordan, Britain is responsible for 20%).