Today, the Prime Minister David Cameron will host the international Anti-Corruption Summit in London, which aims to step up global action to expose, punish and drive out corruption in all walks of life.
As the Panama Papers and other exposés have revealed, the secrecy provided by tax havens fuels corruption and undermines countries’ ability to collect their fair share of taxes. This in turn impacts on governments’ ability to provide accessible, high quality public services such as health and education to their citizens. All countries are hit by tax dodging to a varying extent, but poor countries are proportionately the biggest losers, missing out on at least $170bn [approx. £119bn] of taxes annually as a result.
In advance of the Summit, over 300 leading economists from 30 countries have come together in a letter coordinated by Oxfam to world leaders warning that there is no economic justification for allowing tax havens to continue, and urging them to bring an end to offshore financial secrecy.
Dr Nat O’Connor from the Ulster University and Professor Paul Teague from Queen’s University Belfast were among the signatories, which also included Thomas Piketty, author of the best-selling book ‘Capital in the Twenty-First Century’, and Angus Deaton, the current Nobel Prize-winner for Economics.
We need to wipe out the secrecy that surrounds tax havens with new global agreements on key issues like public country by country reporting, including for tax havens, which means we would know where companies really make their profits and where they are paying their taxes.
Governments must also put their own houses in order by ensuring that all the territories, for which they are responsible, make publicly available information about the real “beneficial” owners of company and trusts. The UK, as host for this summit and as a country that has sovereignty over around a third of the world’s tax havens, is uniquely placed to take a lead.
This isn’t just about arbitrary figures on a balance sheet, but can mean the difference between life and death, as highlighted by Zambian tax activist Cecillia Mulenga at a recent event in Belfast. Cecillia spoke to audiences here about how she had lost a close friend recently who died while eight months pregnant because there were no health facilities in her area even though Zambia is rich in natural resources which are heavily exploited by multinational corporations.
“If those corporations were paying their dues my friend would not have died,” Cecillia said. “They would have built a hospital; they would have built a better road in that same area. That would have helped her and kept her alive.”
Taking on tax havens will not be easy; there are powerful vested interests that benefit from the status quo.
But as Adam Smith reminded us, the rich “should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion”. There is no economic justification for allowing the continuation of tax havens which turn that statement on its head.
Jim Clarken, Chief Executive, Oxfam Ireland