G8 helps itself on tax dodging as rest of the world loses out

Tuesday, June 18, 2013 - 16:23

That’s all folks! This year’s G8 summit has just finished in Northern Ireland.

As often happens, major world events eclipsed the planned agenda to some extent – in this case Syria. Here’s hoping that the ‘very frank’ discussions among the leaders will lead to an agreement that removes obstacles to a cease fire.

But there’s also news from the official summit agenda, which was topped by tax.

We’ve been working hard to push the G8 to make real reforms to the tax system. And we’ve had, I think, partial success

Between the communiqué just issued and the statements made on Saturday at the “Open for Growth” conference in London, it’s clear that the world leaders know that they have to clamp down on the scandal of tax dodging.

The revelations about the breadth and depth of the misdirection of funds going on won’t stop, and governments can’t afford to keep looking both bamboozled and incapable of stopping the scams. 

On Saturday, all ten tax havens controlled by the UK – including Bermuda, Cayman Islands and Jersey – announced that they will comply with the UK government’s strong request that they commit to assemble registries of who owns the companies doing business in their jurisdictions and provide information on how much tax they’re paying.  

Sunny islands, shady deals

These sunny UK islands – which are also quite shady, as activists in London pointed out when they created a new tax haven on the Thames in advance of the summit – are the best-known tax havens, so this is a very welcome move that puts pressure on others like Mauritius, Nauru, and even those jurisdictions like the U.S. state of Delaware, which offers extreme privacy and low tax rates.

Today the G8 heads of government committed to take steps down the same road. Six of them have submitted plans to create registries of beneficial ownership. And there are plans for automatic exchange of information as the new standard among government tax authorities.

But crucially, the G8 failed to provide two things: details on how they’re going to get the non-UK tax havens to sign up to this agreement and solid provisions for how they’re going to include developing countries in the arrangements. 

The G8 has talked a good game on tax dodging, and there has certainly been a breakthrough in the leaders’ recognition of its impact on developing countries

It’s good to see that our campaign on the damage done by tax havens has at least pushed rich countries to start helping themselves with systematic collection and sharing of information.

But actions speak louder than words. We had high hopes that this G8 Summit would deliver significant reforms to the broken tax system that assist poor just as much as rich countries. 

Developing countries lose billions of dollars in vital revenues to tax dodging every year. But instead of making sure that they can hold on to this badly needed revenue, the G8 has helped itself and left the rest of the world without the rapid advance it needs.

G8 summit 2014

It’s not clear if these issues will be back on the G8 agenda again next year when the summit moves to Germany. But even if the topic gets dropped, there are other ways to keep the pressure on.

The G20 – which is the more natural home for these discussions – meets in September in Russia, and should discuss a report on tax dodging, which it commissioned. 

We will be pressing them to go beyond their usual research-and-deliberation mode to put some teeth into the commitments they made in 2009 to go after tax havens.

We’ll take similar steps at the United Nations, the European Union, the African Union, and anywhere else that has influence on global tax rules.

This is all part of our tax campaign, which will launch in a few weeks time.

With activists around the world joining our cause, we will spare no effort to show the tax dodgers that we’ve got them surrounded. The bright lights aren’t going to be turned off so they can go and hide in their corners.

The rules are being re-written at local, national, regional, and global levels. We will be ensuring that countries get the revenues that are rightfully theirs, so they can develop in responsible and accountable ways.