Tax haven tycoons could pay Irma bill
You’d think the people of the British Virgin Islands had suffered enough after Hurricane Irma. After seeing their homes destroyed, they then had to endure a visit from Boris Johnson.
It’s vital we help the relief effort and, typically, our government’s response has been slow. But while I’ve no issue with giving the BVI government £32million in aid, I have huge reservations giving them a blank cheque.
Why? Because the BVI has for many years helped cheat the British taxpayer out of billions of pounds.
Companies registered in the British Virgin Islands don’t pay capital gains tax, VAT, inheritance tax or corporation tax.
Hundreds of thousands of people and firms, many of them British, use the BVI to avoid paying tax in the UK. Britain encouraged places like the British Virgin Islands to develop as offshore tax havens so they could get out of giving them millions in international aid.
But these havens were so aggressive in helping people avoid tax, Britain is losing out on billions.
A staggering 45 per cent of the world’s offshore companies have been formed in the British Virgin Islands. And of the 100,000 UK properties owned by companies overseas, nearly 23,000 are registered in the BVI.
In fact many public contracts for building schools and hospitals in the UK under the Private Finance Initiative have been relocated to tax havens so the contractors avoid tax on profits funded by you, the taxpayer.
The Tax Justice campaign estimates that the British Virgin Islands prevents £27billion being collected in taxes around the world every year.
We’re effectively subsidising each of the islands’ 30,000 inhabitants to the tune of £900,000 a year. That avoided tax could have been spent here in Britain to build schools and hospitals. Or better transport links.
But Tories are now lobbying to change rules set by the Organisation for Economic Co-operation and Development and enshrined in UK law that prevent money from our international aid budget going to the BVI. They’re wrong.
STRINGS
By all means let’s give British Virgin Islands humanitarian aid. But UK aid for reconstruction must have strings attached.
Firstly, we need the BVI to be more transparent about accounts of companies and individuals registered there. Last year, the BVI refused UK calls to publish details of who owns offshore firms registered there. Before we give them any more money that must change. In Labour’s last manifesto, it made 17 pledges to clamp down on offshore tax cheats. They included a tax on havens, forcing millionaires to publish tax returns and strict minimum standards for crown dependencies and overseas territories like BVI.
Publishing a public register of owners registered will show us exactly who is cheating the British taxpayers. As the leaked Panama Papers showed, even David Cameron’s family was benefiting from offshore trusts.
Having a public register will then allow us to get these people to chip in to rebuild the BVI.
When Labour came to power in 1997 we introduced a windfall levy on the profits of privatised utilities which raised £5billion to fund our New Deal programme to get longterm unemployed people into work.
So why don’t we have an offshore levy on British millionaires and firms who avoid tax in Britain?
Some of that could go to help rebuild the BVI. The rest could go to fund projects in the UK.
Tax-dodging millionaires have become very rich thanks to places like the BVI. Now it’s time for them to give back, and pay back.
I’ve never been to a film premiere. But there are two I would have loved to have gone to. The first was Al Gore’s An Inconvenient Sequel, the follow-up to his climate change film. The second is Nature of The Beast, about my old flatmate Dennis Skinner (right). He’s another champion of the inconvenient truth, in and out of Parliament, over his 47 years as an MP. I’m looking forward to seeing the film at the Labour Conference, where no doubt Dennis will get a red carpet.