The UK is the leading enabler of global tax abuse. This must end.
Tax Justice Network Africa and Tax Justice UK have written to the Chancellor and the Foreign Secretary demanding action to curb global tax abuse. Read the letter here.
What’s the damage?
Earlier this year, now Foreign Secretary David Lammy gave a speech saying the UK must ‘go further and faster’ in tackling global corruption and tax abuse.
The fact that three out of the four offshore jurisdictions at highest risk of involvement in international corruption are British Overseas Territories, was branded by David Lammy as ‘a contradiction that cuts into our credibility’. He’s right.
Last year’s State of Tax Justice Report from our partners Tax Justice Network found that over $492 billion a year is lost to global tax abuse. The kicker; the UK and its Overseas Territories are responsible for around a third of global tax avoidance.
This undermines global efforts to achieve sustainable development goals, promote gender equality and fulfil human rights obligations. It also deprives governments – including the UK – of domestic funding to ensure children are educated, people receive health care, infrastructure is developed, and economies can grow.
How this disproportionately harms the Global South
Although lower-income countries are hit harder by global tax abuse, global tax rules have predominantly been set by high income countries. Annual tax losses suffered by higher income countries are equivalent to 9% of their health budgets, but for lower income countries this rises to 49%.
African leaders have been taking on illicit financial flows, including tax evasion, for decades. These unlawful activities represent a continuation of the oppressive and extractive colonial model, which plunders nations and enriches a few at the expense of people and the planet.
Cracking down on tax havens – like British Overseas Territories – is an important step toward the UK’s goal of rebuilding trust with partners in the Global South.
Time for the UK Government to walk the walk
Tax abuse in the British Overseas Territories is largely enabled by their lack of transparency measures, which the UK Government has failed to bring into line with the rest of the UK.
For example, the UK has ‘Public Registers of Beneficial Ownership’.
These registers – which are fully transparent and accessible to everyone – allow the Government, journalists, accountability organisations and the public, to see who ultimately owns or controls an asset such as a company or property.
In practice this makes it much harder for the perpetrators of tax abuse to hide.
It had been agreed that by the end of 2023 all Overseas Territories would implement public registers, but for the vast majority this has not happened nearly one year on. This is not good enough.
Tax Justice Network Africa and Tax Justice UK are demanding that all British Overseas Territories implement fully-transparent and accessible registers and the UK government sets a clear deadline for this, which must be adhered to.
And there’s no better time than now. Next week will see the Joint Ministerial Council, in which UK Ministers will meet with political leaders from the Overseas Territories to discuss a range of issues.
The UK should seize, not squander, this opportunity to end Britain’s leading role in enabling global tax abuse. This would also help raise revenues, reduce extractionism, and restore trust between the UK and global partners.
To maintain this trust and help ensure effective, fair, and sustainable global tax cooperation, the UK must also constructively engage with the United Nations Tax Convention. This is a crucial new mechanism resulting from Global South leadership at the UN, and upcoming negotiations this month and in February 2025 offer the UK the chance to take a new approach and demonstrate global leadership and partnership.
The British public want action
Almost 10,000 people have written to their MP this year asking for the Government to stop tax havens.
As of last November, polling showed 72% of the public believed the UK should take more responsibility to work with Britain’s offshore financial centres in tackling money laundering and tax evasion.
If you’re a constituent concerned about the billions of pounds of tax revenue lost to tax havens – money that could be used to breathe life into struggling public services in the UK and in countries around the world – there’s still time to write to your MP.
Ahead of the Joint Ministerial Council next week this blog post has focussed on the British Overseas Territories. It is equally important that the British Crown Dependencies, like Jersey and Guernsey, also publish their registers of beneficial owners in line with the rest of the UK.