Proposals to clean up ‘colonial legacy’ of UK’s tax havens have sparked controversy
THE UK GOVERNMENT encouraged the creation of a network of tax havens and should now take drastic action to reform them, Green leader Natalie Bennett has said amidst an argument over the colonial legacy of offshore jurisdictions.
Over 50 per cent of the 215,000 offshore firms named in the ‘Panama Papers’ leak have a link to UK overseas territories and dependencies.
Green party leader Natalie Bennett, speaking to CommonSpace, said the British Overseas Territories (BOT) should be given the choice to become independent of the UK. “But if they want to maintain the link to Britain, we have a responsibility to act. It’s undoubtedly a colonial legacy that’s never been cleaned up.
“It’s a bit like the situation in Iraq or Afghanistan. We have a special responsibility, because we helped create the situation. The UK encouraged these territories to become tax havens; now we have to deal with the consequences.”
Labour leader Jeremy Corbyn and Liberal Democrat politician Vince Cable both called last week for the UK government to intervene in the devolved governments of BOTs in the absence of immediate and meaningful action on tax havens.
“In other times we’d have a revolution on the back of this – it’s the systematic ripping-off of working class people by political elites” Labour candidate Neil Findlay
A petition on the campaign site 38 Degrees, calling for UK Prime Minister David Cameron to “close down all tax havens under British control” has attracted nearly 200,000 signatures.
But politicians of the territories and dependencies have hit back at the proposals. Cayman Islands premier Alden McLaughlin said the proposals were akin to the “worst excesses of 18th Century colonialism”.
Channel Islands resident Kirsten Morel, writing in the Guardian, said that direct rule would end “800 years of autonomy and democracy” and would be ineffective.
However campaigners with the Tax Justice Network (TJN) have denied that he colonial comparison is valid. Alex Cobham, research director with the TJN, pointed out that Jersey residents – the largest of the Channel Islands, and an international offshore hub – have long been calling for the UK to take direct measures, as the dominance of finance has squeezed out other sectors and led to serious economic instability .
“We’re specifically calling for the territories to create public registries, matching what the UK government will bring in in June this year.” Robert Palmer, Global Witness
Cobham said: “It’s not about ‘direct rule or nothing’. What we’re talking about here is similar to the abolition of the death penalty, or the decriminalisation of homosexuality, which were pushed across the overseas territories by the UK saying ‘you must do this’. Cameron can say that with the public register of beneficial ownership, and the territories will have to do it.
“It certainly is true that the UK has financial responsibility for this situation. In the 50s and 60s the UK said, ‘Either we’ll have to keep paying aid to these places, or we have to give them something else to do’. The Bank of England warned that it would cause all sorts of regulatory problems; but the Treasury wanted to make money. Now we need to look for different economic development models – instead of subsidising these places to run dirty business.”
“We have a special responsibilty, because we helped create the situation.” Natalie Bennett
Robert Palmer of Global Witness, a group which researches human rights abuses and resource exploitation, said: “We’re not calling for imposition of direct rule – we’re saying that if UK jurisdictions don’t open up to transparent ownership then the UK should consider imposing that on them directly.
“We’re specifically calling for the territories to create public registries, matching what the UK government will bring in in June this year.”
Reform of the UK’s own tax system is also proposed as a solution to the global problem of tax avoidance and corruption, because the UK has such an influential role in the system .
“We need to look for different economic development models – instead of subsidising these places to run dirty business.” Alex Cobham, Tax Justice Network
One concrete move Green leader Natalie Bennett proposes is to abolish the secretive City of London Corporation – the only part of Britain over which parliament has no authority. “The City is at the heart of this [Panama papers expose]”, Bennett said. “It’s not just something happening far away.”
Cayman Islands premier Alden McLaughlin said the proposals are akin to the “worst excesses of 18th Century colonialism”
In an interview with CommonSpace , Scottish Labour candidate Neil Findlay said of the revelations: “In other times we’d have a revolution on the back of this – it’s the systematic ripping-off of working class people by political elites.
“Any UK citizen identified in this should be investigated by HMRC. If any party donor, including to my party, is on the list there should be an inquiry and donations should be returned.”
Other proposals in recent days have included the imposition of ‘withholding taxes’ or heavy sanctions on countries refusing to exchange information or establish a public registry of beneficial ownership, such as the United States.
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Picture courtesy of 38 Degrees