THE BLOG
05/11/2017 19:23 GMT | Updated 05/11/2017 19:23 GMT

It's Not Just One Bad Appleby, The Paradise Papers Show This Rotten Offshore System Needs To Change

These latest leaks make one thing clear. The era of secrecy is over. Transparency is the way forward. It's a matter of when not if. More leaks are coming. It time for the UK to get ahead of the curve once more, and to stop wringing its hands and crying crocodile tears. Please join me in calling for action.

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Like me, many of you probably went to a local fireworks display this weekend. But the real fireworks for tax justice campaigners came on Sunday evening, some 412 years on from the original gunpowder plot. BBC Panorama, the Guardian and many others have once again laid bare the scale of the world's rotten offshore system that enables a few of the world's richest people and companies to hide their wealth in secrecy.

Eighteen months ago the Panama Papers contributed to (for example): bringing down the government of Iceland; forcing the Pakistani Prime Minister to resign, and triggered a referendum in Ecuador on politicians' use of tax havens (where the public voted that no elected official could use them).

This Sunday saw the Paradise Papers and revelations of Appleby, a consulting firm that advises their clients on using tax havens to hide their money overseas. In an extraordinary series of revelations, Panorama questioned the offshore activities of Her Majesty the Queen, a member of President Trump's Cabinet, former Conservative Party treasurer and peer Lord Ashcroft, a Premier League Football Club and many others.

It is important to remember that this is not just about the Queen, Lord Ashcroft or Appleby. Or about one or two particular tax havens. This is about a global web of offshore secrecy which is estimated to hide somewhere between $7-$30trillion secretly offshore away from the taxman. These estimates equate to some 4-10% of global wealth hidden offshore. Tax Justice Networks says that around 20% of corporate taxes are lost offshore. This selfishness increases the tax burden on the rest of us who pay our taxes fairly. And Appleby is just one of a number of similar firms that provide offshore secrecy to their clients. There are many more where they came from that are still operating in the shadows.

This isn't just an academic issue. It affects real people and it hurts them. The world's poorest nations and most vulnerable people are the ones who suffer most. The UN estimates developing countries lose at least $100billion every year as a result of investments routed through tax havens. This is not far off the total aid budget. If we had a more transparent system this would help us to move towards a future free of aid dependency. Africa actually loses more through tax dodging and corruption than it gains in aid. Oxfam recently said that around one third of rich Africans' wealth sits offshore, and if that money was in Africa and taxed properly, it could fund enough teachers to educate every child in Africa. Given the scale of the problem, I wish the negative impact of offshore tax havens were discussed in the press (particularly some British press) just as much as the UK Aid budget is.

This is also not just about other countries and territories. The UK sits at the heart of the offshore tax haven world. Together with its Overseas Territories (for example, the British Virgin Islands, Cayman Islands and Bermuda) and Crown Dependencies, the UK is the biggest financial secrecy jurisdiction in the world, according to the latest Financial Secrecy Index. So next time a UK Government Minister says that others need to act, let's challenge Boris Johnson, Theresa May and others to demonstrate a bit more leadership themselves.

Every week I hear new stories of corruption and tax dodging facilitated by UK Territories. This week I was reading about how the British Virgin Islands and Anguilla are helping to facilitate North Korea's UN sanctions busting, and how the Cayman Islands had facilitated tax evasion schemes leading to over £175million of fines in Australia.

While this all might sound a bit abstract and tough to crack, the solutions are actually very simple. They just require some political courage. So here are my suggested immediate actions for Theresa May as Prime Minister and Boris Johnson, who as Foreign Secretary is responsible for the UK's Overseas Territories:

1. Finally set a timeline by when the UK's Overseas Territories will adopt the same transparency as the rest of the UK - public registers of who owns which companies. This is not controversial and there is a House of Commons majority for it. We just need to get on with it! It may take a bit of effort and support for the territories, but there really are no excuses any more.

2. Ensure that we also have transparency in the UK's Crown Dependencies. Again, support might be needed but there is no time to waste.

3. Develop a clear plan and timeline for including trusts in the UK's, Overseas Territories' and Crown Dependencies' registers.

With these three steps, huge amounts of corruption and tax dodging facilitated by UK territories could be slowed. And before you argue businesses will just move elsewhere, let me make two brief points. First, we are working towards transparency across the EU so it will become a global standard soon hopefully anyway. Second, I believe the UK has a moral responsibility to stop facilitating this behaviour, particularly given that we spend so much aid to help poor countries. Let's stop giving with one hand and taking with the other.

These latest leaks make one thing clear. The era of secrecy is over. Transparency is the way forward. It's a matter of when not if. More leaks are coming. It time for the UK to get ahead of the curve once more, and to stop wringing its hands and crying crocodile tears. Please join me in calling for action.