Given the government’s media blitz over the last few days you might be forgiven for thinking that Cameron was about to pull off a coup in cracking down on corporate tax avoidance at the G8. We shall see. This is a case where it pays to read the small print. Ostensibly he is trying:
- to get UK-controlled tax havens to sign up to a OECD agreement on providing tax information,
- to establish a worldwide standard on automatic tax information transfer,
- to get G8 countries to reveal the identity of shell companies, and
- to help developing countries get their rightful entitlement to tax
All perfectly desirable objectives, but fraught with caveats.
The OECD action plan to put a stop to corporation tax loopholes has not yet been published so it is not at present clear how comprehensive or penetrating its strictures will be, and the final outcome after being presented to G20 finance ministers next month is expected to take another whole 2 years.
Even if the 10 UK Crown Dependincies and Overseas Territories (i.e. tax havens) sign up to their t.i.e.s (tax information agreements), will they be published so that NGOs can monitor their implementation, and how will they be enforced? Revelation of the real beneficial ownership of trusts, foundations and shell companies in tax havens would certainly be a major advance – not least when the latest expert estimate of the wealth secreted away in tax havens amounts to no leass than £21 trillions! – but again how will it be enforced and what are the sanctions to secure compliance? And will the G8 ensure the developing countries get all their tax dues when most of the banks and big businesses currently cheating them of their tax are Western-controlled?
Without looking a gift horse in the mouth, there are good reasons for doubting both the sincerity and effectiveness of the present proposals. The Tory party gets half or more of its funds from the finance sector (banks, hedge funds, finance houses of the big multinationals), so it seems unlikely the Tories will bite very hard the hand that feeds them.
If they were really earnest in ending corporate tax avoidance, they would simply threaten to close down any of the 10 UK tax havens that didn’t fully comply. And if they were really serious about stopping tax avoidance, they would back not a very narrowly based General Anti-Abuse Rule, but a much more broadly based General Anti-Tax Avoidance Principle bill.
That’s why, having won 19th place (out of 20) in the ballot for Private Members Bills, I’m putting forward a UK Corporate Transparency Bill which will require greater disclosure from large companies, real enforcement of beneficial ownership requirements, a duty on banks to report to HMRC those large companies that hold accounts with them (so that tax evasion cannot happen), and a requirement on the richest 1% of individuals (those earning more than £150,000 a year) and the top 250 companies to publish their annual tax returns.
One irony – if that’s the word – is that I actually drew 2nd place in the ballot, but one of the Deputy Speakers arbitrarily decided to reverse the order! So instead of being high up in the top 7 with a good chance of getting a bill passed on to the statute book, nos. 13-20 were unceremoniously dumped at the end of the queue with no chance at all!
