Analysis May must take action over tax havens or be judged complicit
David Cameron said it when he was prime minister, and the Labour MP Margaret Hodge has now made the same point. When it comes to cleaning up tax havens, sunlight is the best disinfectant.
It was at the G8 summit in 2013 that Cameron first called for transparency. He urged the governments of the UK’s network of offshore centres, which spreads from the Caribbean to the Channel, to make public the names of those individuals hiding behind shell companies incorporated on their shores.
His efforts were frustrated by lobbying from the offshore industry, including Appleby, the law firm at the centre of the Paradise Papers.
Four years and three big data leaks later, the British government has yet to push through this reform. Files from HSBC’s Swiss bank, and then from the Panama firm Mossack Fonseca, exposed an orgy of tax dodging, money laundering and corruption.
The Paradise Papers leak shows offshore activity is continuing, even escalating. In an emergency debate on tax avoidance and evasion held in the House of Commons yesterday, MPs on both sides called once more for the government to act on transparency. Those calls are becoming increasingly difficult to resist.
Hodge, who put tax avoidance on the political map in her time as chair of the public accounts committee, took no prisoners as she opened the debate. Describing Bono as a “self-appointed philanthropist”, she asked whether the rock star, who has a cameo in the Paradise Papers, would have used tax havens if he had thought we would all find out. The Queen’s financial advisers will now be asking themselves the same question.
The government does have the power to legislate for change in those territories that recognise the British monarch as their head of state, and her privy council as their supreme court.
It has used those powers before, to outlaw discrimination against gay people and to end capital punishment.
The Conservative MP Andrew Mitchell agreed with Hodge. He believes the time has come for the government to act on public registers.
In yesterday’s debate, Mitchell suggested measures could be included in the forthcoming finance bill, which is expected to pass next year.
Those havens that embraced openness would get first-mover advantage, he predicted, by attracting the lion’s share of the legitimate offshore business.
If such arguments cannot convince Britain’s tax havens to open their own shutters, Mitchell believes Westminster should use its powers to let in the light. As a former chief whip and Treasury representative, presentative, his words carry weight.
Should the prime minister fail to act, she risks s looking complicit in wrongdoing.