A TORY MP has called on the government to halt further regulation on tax havens, claiming that they are an economic benefit.
Mark Field, MP for the Cities of London and Westminster, told a Sovereign Group seminar that the debate around tax havens was "one-sided", The Telegraph reports. The TUC's £25bn estimate for money lost through corporate tax avoidance via international finance centres was too high, he said.
The UK has a constitutional relationship with 30 offshore financial centres, Field claimed. It was therefore "essential" that the UK ensures any regulation is appropriate.
"Together, the Crown Dependencies make a significant contribution to the liquidity of the UK market. Together, they provided net financing to the UK banks of $332.5bn in the second quarter of calendar year 2009.
"These funds are largely accounted for by the 'up streaming' to the UK head office of deposits collected by UK banks, including Lloyds Banking Group and Royal Bank of Scotland, as well as Barclays, HSBC, Santander and a number of building societies."
Nicholas Shaxson, author of Treasure Islands and the target for many of Field's comments, replied: "There is a permanent regulatory ‘race to the bottom' between jurisdictions as each seeks to attract flighty global capital.
"Tax havens with their ‘fast and flexible' lawmaking lead this race. Financiers wield the threat: don't tax or regulate us too much or we'll run offshore. So the race goes on. You will also find that a lot of the exotic instruments behind the subprime mess were located or listed offshore. Tax havens are never the only cause, but they were a major factor."
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