NO HAVEN FOR BROWN FROM OBAMA
Barack Obama’s determination to hit the ground running when he becomes the 44th US President on 20 January looks set to test the special relationship between Britain and America.
Eighteen months ago Senator Obama was one of three sponsors of a proposed law in the US Congress called simply the Stop Tax Haven Abuse Bill. It was not passed. But of the 36 states identified as "offshore secrecy jurisdictions" eleven are either under direct UK rule as British Overseas Territories – including Bermuda and Cayman Islands – or are tiny states in the British Isles – such as Jersey and the Isle of Man – which remain independent because the UK protects them.
It is not the first time that British territories have been identified at the heart of international tax avoidance. The Organisation for Economic Cooperation and Development (OECD) published a report on Harmful Tax Practices in 2000. Eight years on, most of the tax havens it identified remain in a group of 35 which the OECD says are beginning to cooperate but are still being watched. Seven of those 35 are British in one way or another. Altogether the OECD reckons there is up to $7 trillion (£4,500 billion) salted away in secret accounts evading tax.
Some pensioners in this country pay tax on incomes little more than £6000 a year. Even those over 65 are taxed on incomes just above £9000. It is outrageous that they have to pay tax while wealthy crooks use banking secrecy in British territories to avoid it.
One of the three jurisdictions listed by the OECD as ‘uncooperative’ is Liechtenstein which was the target of a recent sting by a former employee of LGT, a bank owned by the country’s Royal Family. He sold account details to tax authorities around the world, including Her Majesty’s Revenue & Customs which paid £79,000 for a list of 300 British citizens. It expects to recover £300 million from them – that’s a £1 million each.
Cracking down on tax havens will be one of Obama’s priorities. Not least because the US Treasury needs the $100 billion a year tax havens are estimated to cost. With the UK Government responsible for nearly a third of the tax havens identified by Levin and Obama, ending banking secrecy there will be an early test of the special relationship between new Labour and the new USA.
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