Cracking down on tax havens: our step towards fairness

A truly momentous thing happened in the House of Commons last Tuesday, which has already rippled its way across the world.

While the local elections, Brexit altercations and the Royal Wedding might have dominated the news last weekend, the major change that MPs agreed might well prove the most lasting and transforming of all.

In short, a cross-party group of senior MPs agreed to finally ensure that the UK’s Overseas Territories (OTs) adopt the same level of transparency as the rest of the UK by 2021.

The UK’s OTs include the British Virgin Islands, the Cayman Islands and Bermuda. These tax havens cost developing countries at least $100 billion a year in lost revenue according to the UN, and the secrecy they enable helps corruption to thrive ‚Äì Global Witness has some great examples. The transparency that MPs agreed will mean that owners of companies registered in the OTs will have to publish their names in open registers. This will make tackling corruption and tax dodging much easier for law enforcement, journalists, NGOs and others.

How we achieved change

The amendment was passed after a huge fight ‚Äì I still can’t quite believe we did it! So how did we get here? Below is a potted history of some key milestones:

• 2003 ‚Äì Richard Murphy and John Christenson set up the Tax Justice Network, and start talking about the problems with tax havens.
• 2005 ‚Äì Christian Aid first starts talking about this issue in public.
• 2012 ‚Äì A Christian Aid Tax Bus tours the country telling people about these issues.
• 2013 ‚Äì David Cameron focusses the G8 on tax and transparency issues. He introduces transparency in the UK, but only urges the UK’s OTs and Crown Dependencies (CDs) to follow suit.
• 2014 ‚Äì David Cameron again urges the UK’s tax havens (OTs and CDs) to introduce transparency. They fail to respond to UK government letters; don’t all consult on the issue and generally do everything they can to fight against transparency.
• 2015 ‚Äì Christian Aid, along with many other collaborators, including Global Witness, Transparency International, Oxfam, ONE, and Action Aid (to name but a few) talk to a range of parliamentarians about how important this issue is, while the UK government gives up on trying to persuade the tax havens to adopt transparency. The UK government legislates for a public register in the UK. We work to amend the legislation successfully, but don’t manage to succeed in terms of the tax havens.
• 2016 ‚Äì David Cameron hosts an Anti-Corruption Summit. The whole anti-corruption sector comes together led by Transparency International to ask him to adopt transparency in the tax havens as our top priority, including a massive stunt in Trafalgar Square led by Oxfam. We don’t succeed. But more pressure is put on. The Panama Papers reveal some key corruption cases and focus on the British Virgin Islands.
• 2017 ‚Äì The wonderful and tenacious Margaret Hodge MP leads a group of cross-party parliamentarians to seek to amend a bill to adopt transparency in the tax havens. We get close, but not over the line. The Paradise Papers reveal again the scale of the offshore secrecy world.
• 2018 ‚Äì Thanks to Margaret Hodge and Andrew Mitchell’s amazing leadership and solid support from many senior cross-party MPs, the UK government backs down. We’re helped in the end by many factors, including Global Witness’ research about the scale of Russian money in the UK’s OTs.

In short, we had wonderful parliamentary champions who would stop at nothing to get the job done. We had NGOs working together and producing top quality research and sector lobbying to achieve change. We tried to lobby the UK government, but, when that failed, we used all the parliamentary tools we could. And we were backed up by excellent journalism, from places such as the Guardian and more recently the Times and Financial Times.

So, what’s next?

First, we need to ensure the legislation safely passes through the House of Lords. We also need to keep watch, as many of the Overseas Territories are extremely unhappy with what has happened. However, the time has come for change.

Finally, and most importantly, this action puts the pressure on the 100 or so other secrecy jurisdictions including UK’s Crown Dependencies (Guernsey, Jersey, Isle of Man) around the world to adopt similar rules. If this action in the UK can cause a ripple across the world – even endeavouring to drive a race to the top in global tax transparency standards – then we’ll have done a very good job indeed in driving real global change.

Check out the Bond Anti-Corruption group, which brings members together to push a zero-tolerance policy on corruption to alleviate its devastating impact on governance, poverty and development.