adminLONDON – David Cameron is under mounting pressure ahead of hosting an anti-corruption summit after hundreds of the world’s top economists called on the UK to take the lead in tackling tax havens.A letter signed by 300 economists has derided the low tax jurisdictions as serving “no economic purpose” and called for new measures to prevent them from being used to help the rich and powerful avoid paying their fair share.t says that poor countries are “the biggest losers from tax havens” and that not doing more has undermined global governments’ apparent drive for sustainable development.
“Tax havens basically allow companies and certain individuals to free-ride on the rest of humanity,” signatory Dr Ha-Joon Chang, of the University of Cambridge, told the BBC
The letter also calls for the introduction of new international rules designed to force companies to report taxable activities on a country by country basis, allowing duties to be applied where money is made rather than where it is reported. To help achieve this, they want low-tax havens to be forced to publish details of who owns the companies and assets held there.
The economists, including almost 50 professors from British universities as well as Nobel prize-winner Angus Deaton, say the UK is in a “unique position” to take the lead as it has sovereignty over around a third of the world’s tax havens. About half of the companies revealed in the Panama Papers documents are based in British overseas territories.
James Quarmby, a tax lawyer at the international law firm Stephenson Harwood, countered that offshore havens play an important role in international finance and trade. There is “more money laundering going on in New York, Frankfurt and London than any of the [offshore] finance centres”, he added.
The Financial Times says supporters of tax havens typically argue “their low tax rates provide stability and simplicity – for example, by preventing investors from multiple jurisdictions from being charged double taxation”.
Most refute this, however. The economists’ letter states that “territories allowing assets to be hidden in shell companies, or which encourage profits to be booked by companies that do no business there, are distorting the working of the global economy”. – TheWeek
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