9th May 2016
More than 300 economists have demanded that secrecy is stripped from tax havens with the UK government being called upon to force the hand of those operating under British jurisdiction.
The call comes as research by the Tax Justice Network suggests that $12 trillion has been siphoned offshore as reported in the the Guardian.
That analysis, carried out by Columbia University professor James S Henry for the Tax Justice Network, shows that by the end of 2014, $1.3tn of assets from Russia were sitting offshore from Russia alone.
The Prime Minister David Cameron will host a summit of heads of government on the issue of tax havens in London this week.
British officials are currently demanding that the crown dependencies and overseas territories agree to a system of the automatic exchange of information on beneficial ownership of companies, which would include significantly more information on shell companies.
The attendance of certain countries, notably the Cayman Islands, is in doubt because they opposed the measure.
But one of the signatories of the letter, Jeffrey Sachs, director of Columbia University’s Earth Institute and an adviser to UN secretary general Ban Ki-moon has hit out at the US and UK governments saying that the tax havens could not have set up these arrangements without their support.
The signatories include Angus Deaton, the Edinburgh-born 2015 Nobel prize-winner for economics, Ha-Joon Chang, the well known development economist at Cambridge University, Nora Lustig, professor of Latin American economics at Tulane University and Olivier Blanchard, former IMF chief economist.
Speaking on BBC Radio 4’s Today programme, Sachs said: “The UK and the US need to take the lead right now to end these tax secrecy havens. We see from the Panama papers, these are simply conduits for massive illegality, corruption, tax evasion and many other nefarious deeds. They just need to end.
“If the UK and US and the European Union as a whole decided on Thursday at the UK conference that enough is enough … there could be a phenomenal change in a very short period of time.”
Forty-seven academics from British universities, including Oxford and the LSE, have signed the letter.
The signatories state: “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.”
Sachs added: “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.”