Monday, March 23, 2009

Besieged Brown and the tax havens

A new article entitled "Brown plans global scrutiny of tax havens" suggests that UK Prime Minister Gordon Brown is taking the tax haven issue seriously. This is slightly at odds with a blog we did last month casting doubt upon the UK's commitment to the issue. Since then, we've received some encouraging signs. The article says:

"Despite a rearguard action by tax havens, the prime minister intends next week's G20 summit to discuss plans for a multilateral exchange of information on "offshore" accounts."

We like the word "multilateral" very much, very much indeed (an alternative, bilateral deals, means that many billions of people, notably from developing countries, will fall through the cracks.) The article added:

"Brown would like the Paris-based OECD to work out a detailed blueprint for reform over the coming months if, as expected, the London talks on 2 April back action to combat capital flight and improve transparency."

Ah. The OECD. Well, change is possible, but we have recently taken a very dim view of what seems to be happening at the OECD at the moment.

And now the question of automatic exchange of information (which we love), versus exchange of information on request (which we loathe:)

"Campaigners said the initiative was welcome but said much would depend on what tax havens would be forced to reveal. Under the current OECD plans, exchange of information is not automatic but relies on those making inquiries knowing full details of accounts and account holders. . . . Richard Murphy of the Tax Justice Network, said: "A multilateral system is the way forward but to be fully effective it would have to be automatic."


But of course caution is the watchword.

"Government sources said the UK was taking reform of tax havens step by step, fearful that pressing too hard at this stage would damage the growing international consensus for reform. They said Downing Street had been "besieged" in recent days as tax havens reacted strongly to signs that they will be the prime targets of proposals to toughen up international regulation."

In short, we are giving UK Prime Minister Gordon Brown a little more benefit of doubt than we were before, but we are most conscious of the powerful political forces arrayed against him. Brown is certainly in political difficulties over this, and the opposition Conservative party which currently has a significantly better than average chance of winning at the next election (which must be held by June 3 next year) is, notwithstanding Brown's appalling record on tax havens, the traditional party that supports the offshore system.

So we'll look forward to concrete steps - and we'd like to see is a clear roadmap for implementation - but won't hold our breath for too much yet.

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