Cameron begs tax havens to ‘get our own house in order’ ahead of G8
David Cameron has suggested a "critical mass" of participation in measures designed to reduce the effectiveness of offshore tax havens is close, as next month's G8 summit looms.
The prime minister has written to the leaders ten overseas territories and crown dependencies pleading with them to "get our own house in order" before world leaders gather to address the issue in Northern Ireland.
Cameron is seeking to make major progress on tax evasion and aggressive tax avoidance in the summit and has made it a key part of Britain's presidency of the G8.
But the involvement of territories like Bermuda, the Turks and Caicos Islands and Montserrat in a series of eyebrow raising revelations is threatening the UK's credibility in tackling the issue.
"I believe passionately in lower taxes as a vital driver of growth and prosperity for all," Cameron wrote.
"But lower taxes are only sustainable if what is owed is actually paid – and if the rules to achieve this are set and enforced fairly to create a level playing field right across the world.
"There is no point in dealing with tax evasion in one country if the problem is simply displaced to another."
He claimed a "critical mass" was building on automatic tax information exchanges, which will help tax transparency across the world, and said progress was being made on establishing 'beneficial ownership' – who benefits from major companies' activities.
Six of the ten territories receiving the letter from Cameron have already agreed to share information bilaterally with the UK and multilaterally with the G5.
Offshore financial secrecy is being investigated by American, British and Australian authorities following the leaking of masses of information to the International Consortium of Investigative Journalists, which has passed the information on to tax authorities.
"Hidden company ownership enables corruption, state looting and dodgy deals that directly deplete state budgets and entrench poverty," Stuart McWilliam of Global Witness explained.
"Arms traffickers, drug dealers, and corrupt politicians all use shell companies to carry out their illicit activity.
“By requiring the names of the ultimate beneficial owners of all companies to be made public, G8 leaders could provide a huge boost to efforts to reduce corruption and financial crime globally and to promote development worldwide. There is no excuse for them not to act."
Scrutiny of multinational corporations' tax activities is generating intense hostility from commentators, as Google chief executive Eric Schmidt experienced last week. Schmidt, who is a member of Cameron's business advisory group, faced a difficult evidence session in front of the Commons' public administration committee in which he struggled to justify his company's tax arrangements.
Google generated $18 billion in revenues from the UK between 2006 and 2011 but paid just $16 million in taxes over the same period.
Offshore tax havens are also facing intense criticism. The 'Enough Food For Everyone IF' campaign pointed out earlier this month the Cayman Islanders are on paper 320,000 times wealthier than Nicaraguans.
"The number of high-ranking politicians in the US and Europe recently shown to have hidden offshore accounts could fill a parade of shame," Jeffrey Sachs, the director of Colombia University's Earth Institute, said.
"The poor world asks the rich: when will you start to walk the walk on true financial reform?
"Until that happens, the world economy will suffer from austerity and financial instability, while the rich flee to their islands of abuse."
A high-level event on the issue takes place on June 15th.