Economists Warn World Leaders To End Tax Havens

More than 300 economists warn world leaders there is no “economic justification” for tax havens and urge them to stop the practice.

The economists say in a letter that the UK is uniquely placed to lead in ending offshore secrecy as it has sovereignty over around a third of the world’s tax havens through its Overseas Territories and Crown Dependencies.

The call from leading experts across 30 countries comes ahead of the Government’s anti-corruption summit of 40 countries, as well as World Bank and IMF representatives in London on Thursday.

Signatories include Jeffrey Sachs, an adviser to UN Secretary General Ban Ki-Moon, last year’s Nobel Prize-winner for economics Angus Deaton and Olivier Blanchard, former IMF chief economist, as well as 47 professors from British universities and academics from top global institutions such as Harvard

They say tax havens undermine the ability of countries to collect taxes, with poor countries being the biggest losers.

The letter says: “Territories allowing assets to be hidden in shell companies or which encourage profits to be booked by companies that do no business there are distorting the working of the global economy.”

They are calling for new global rules requiring firms to publicly report their taxes in the country they operate, and to ensure all territories publicly disclose information about the real owners of companies or trusts.

Jeffrey Sachs said: “Tax havens do not just happen. The British Virgin Islands did not become a tax and secrecy haven through its own efforts. These havens are the deliberate choice of major governments, especially the United Kingdom and the United States, in partnership with major financial, accounting, and legal institutions that move the money.  

“The abuses are not only shocking, but are staring us directly in the face.  We didn’t need the Panama Papers to know that global tax corruption through the havens is rampant, but we can say that this abusive global system needs to be brought to a rapid end. That is what is meant by good governance under the global commitment to sustainable development.”

More than half of the companies set up by Mossack Fonseca, the law firm in the Panama Papers leak, are from British Overseas Territories such as the British Virgin Islands.

Now governments across the world have begun investigating possible financial wrongdoing by the rich and powerful after the leak of more than 11.5 million documents.

The papers have revealed financial arrangements of prominent figures including Prime Minister David Cameron’ s father and friends of Russian President Vladimir Putin. 

More than 200,000 offshore entities that are part of the Panama Papers investigation will also be revealed this evening.

Oxfam, which co-ordinated the letter, is urging the Government to intervene to ensure that Britain’s offshore territories follow its lead by introducing full public registers showing who controls and profits from companies incorporated there.


via Business News – Markets reports and financial news from Sky