Offshore centre debate leaves MPs up creek without paddle
Tax havens under scrutiny following suggestions they have been critically involved in many of the failings of the global economy
Cayman Islands
No one watching the Treasury select committee’s inquiry into the offshore
centres, friend or foe of tax havens, can think that MPs are about to come up
with a solution.
The havens have come under scrutiny following suggestions they have been
critically involved in many of the failings of the global economy.
That was a suggestion witnesses before the committee last week, the first
meeting the MPs have had, were keen to play down.
‘Most centres are determined to be legitimate. They want to regulate
properly,’ said John Whiting of PricewaterhouseCoopers.
They have also upped their standards and changed their pitch to global
business in recent years.
‘There’s an increasing awareness among the regulated community that if they are
doing business in a place which is seen to be badly regulated, that is a poor
reflection on them,’ Kari Hale, Deloitte partner and former FSA chief, told the
MPs.
Whiting said he did not believe there were any accurate figures showing how
much tax is evaded through offshore centres.
John Chown of Chown Dewhurst (who stressed he was speaking in a personal
capacity), said that fears of a race to the bottom because of tax competition
were exaggerated. The benefits of reducing tax rates for taxpayers get worse the
lower the tax rate becomes, he argued.
The committee has received 27 written submissions. To add to the complexity,
the Society of Trust and Estate Practitioners pointed out that some US states
acted as regulatory havens, an issue MPs might well be very reluctant to try and
resolve.
Oxford academic Professor Edmund Fitzgerald said there should be more
research into criminal and terrorist activity through offshore havens.
‘International security in general, and that of the EU in particular, is
threatened by the routing of criminal/terrorist “black” funds through offshore
financial centres,’ he explained.
The committee now hopes to produce recommendations for government by S
eptember.
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The issue everyone seems to agree on is increasing the transparency of the
centres, and of sharing banking information across borders. But if that sounds a
good idea, there is one last sobering question: isn’t that what the Organisation
for Economic Co-operation and Development, among others, has been trying to do
for years?