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Today the Government will have the chance to fulfil a manifesto pledge, tackle corruption and strike a blow for free and fair markets. What’s more, at least 90 MPs from eight different parties will be trying to help it do so.
Bizarrely, the Government is currently blocking these attempts. The opportunity in question is a straightforward amendment to the Criminal Finance Bill, being debated today in the Commons and backed by a number of Conservative MPs, including former cabinet minister, Andrew Mitchell.
The amendment, put forward by Margaret Hodge, in her role as chair of the All-Party Parliamentary Group on Responsible Tax, would simply extend to Britain’s overseas territories the same requirements on financial transparency as is required in the UK. For free markets to function at their best and fair competition to exist, information should be out in the open for all to see, from investors to regulators.
In 2015 Britain created a public register of beneficial ownership, to make public who the real owners are of companies registered in the UK. As well as shining a light into a murky world of potentially fraudulent behaviour, such transparency also helps to tackle tax dodging. The sight of big multinationals using British tax havens to escape the taxman undermines public confidence in capitalism. It also sends smaller businesses, that do pay their tax, to the wall. The Bookseller’s Association of Britain and Ireland has long complained about Amazon’s aggressive tax avoidance strategies which have distorted the market and contributed to traditional bookshops closing on the UK High Street.
When the Panama Papers scandal hit the news in April last year, the public were rightfully appalled by how large corporations and private individuals could hide their business dealings through a series of shady but legal off-shore processes to avoid paying tax. This was not lost on Theresa May. Just two days before she became Prime Minister in July, she gave a wide-ranging speech in Birmingham where she set out her vision for the country. In it she said:
“Tax is the price we pay for living in a civilised society. No individual and no business, however rich, has succeeded all on their own…It doesn’t matter to me whether you’re Amazon, Google or Starbucks, you have a duty to put something back. So as Prime Minister, I will crack down on individual and corporate tax avoidance and evasion.”
However since that clear promise the Prime Minister seems to have gone cold on it. Her Government recently published the Criminal Finances Bill to try and tackle corruption, yet the bill doesn’t even mention the UK’s tax havens. Given that over half of the corporate entities exposed by the Panama Papers were registered in the British Virgin Islands (BVI), that doesn’t add up. BVI is a British overseas territory. That squarely places the UK at the centre of a global web of tax havens which are costing UK taxpayers, and developing countries, huge sums of money.
The UK public register has proven successful in exposing and preventing corruption, tax avoidance and tax evasion, and other countries are considering following our lead including South Africa, Nigeria, Afghanistan and Kenya.
But the UK, thanks to its network of tax havens, is still the biggest financial secrecy jurisdiction in the world. If Theresa May is going to honour her Government’s manifesto pledge of “leading the world on tax and transparency” then she must extend the same rules we apply to the UK to our overseas territories.
Today’s amendment vote is her chance to do it.
Joe Ware is a journalist and writer at Christian Aid