Cameron, Tax Havens and the G8

The UK Prime Minister, David Cameron has convened a meeting with ministers from overseas territories (Bermuda, Jersey, Guernsey, the Isle of Man, Gibraltar, the Cayman Islands, Montserrat, the Turks and Caicos Islands, Anguilla and the British Virgin Islands) in London it has been announced.

The meeting will take place just moments before the G8 summit takes place in Northern Ireland in just over ten days on June 17th and 18th. The meeting is an attempt to give Mr. Cameron the possibility of putting forward a major clampdown on tax avoidance and tax havens in the world as he chairs the summit meeting.

Tax havens will be high up on the agenda at the G8 summit and it seems that David Cameron will have little choice but to get things sorted in his own back yard before he starts dictating to others that they need to put a stop to tax havens and bring them under some sort of control. Growing pressure of the imminent meeting means that Cameron has had to call those territories in for a lengthy discussion over the matter.

However, it is not clear exactly how much Cameron will be able to do in that meeting with the overseas territories. If Cameron had it his way he would wish the overseas territories to agree to the signing of an OECD (Organization for Economic Cooperation and Development) convention which would mean that the territories and the UK would provide mutual assistance and lead to the divulging of essential information concerning account holders.

The OECD convention has seen a surge forward in the efforts to reveal information in a bid to crack down on tax offenders in the world. Since 2011, there have been 60 countries that have agreed to sign the convention, including Austria, Singapore and Luxembourg most recently (May 2013). Germany, the UK the USA and France have already signed the convention.

The EU has estimated that the loss in revenue from tax havens and tax avoidance runs into trillions of euros every year. There are figures in the region of approximately $21 to $32 trillion that is stashed away in tax havens somewhere in the world today. But, those figures are probably just the tip of the iceberg. That’s possibly the GDP of the USA as a conservative figure or up to twice the GDP of the USA for the worst-case scenario. GDP for the USA stood at $15.7 trillion in 2012. That’s a hefty sum that is put away every year in tax havens.

Some of the British overseas territories have already agreed to cooperate to a certain extent ith other countries, but not in such stringent terms as the convention outlines. That’s what Cameron wants changed.

Rumors are running riot and it seems that Cameron actually wants to get the territories to sign the agreement before he chairs the G8 summit, thus giving him credibility. But, the chances are that the territories will refuse that. Cameron will have little time and not much ability to pile on the pressure at such a late stage.

Seems like it is pretty rich for the UK (one of the countries that has the most numerous overseas territories that are being labeled as tax havens) to start pushing for transparency. But, now it looks like Cameron is in for a rocky ride, especially as some of those territories refuse being labeled as tax-avoidance destinations in the world.

Anyhow, the public will be watching closely, in the hope that the UK finally gets its act together on taxation. Cameron will make a speech in the run-up to the G8 giving his impression of the future of the G8 summit and Britain’s role within that set-up. We’re waiting with bated breath for that. Tax
haven? Heaven?

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