More than 300 leading economists from 30 countries have written to world leaders warning there is no economic justification for allowing tax havens and urging them to lift the veil on offshore secrecy.
Warning global leaders
The letter came ahead of the government’s anti-corruption summit in London today (12 May), which politicians from 40 countries as well as World Bank and IMF representatives are expected to attend.
Forty-seven professors from British universities including Oxford and London School of Economics have joined academics from top global institutions, such as Harvard and the Sorbonne, to sign the letter. They have united to warn global leaders that tax havens undermine countries’ ability to collect taxes, with poor countries proportionally the biggest losers.
Signatories include Thomas Piketty, author of best-selling Capital in the Twenty-First Century; Angus Deaton, the Edinburgh-born 2015 Nobel Prize-winner for economics; Ha-Joon Chang, a development economist at Cambridge University and Nora Lustig, professor of Latin American Economics at Tulane University, as well as influential experts who advise policymakers, such as Jeffrey Sachs, director of Columbia University’s Earth Institute and an adviser to UN Secretary General Ban Ki-moon, and Olivier Blanchard, former IMF chief economist.
‘The case against tax havens has been made by the world’s top economists. If David Cameron wants the anti-corruption summit to really make a difference, he needs to stand up to Britain’s Overseas Territories and Crown Dependencies instead of allowing them to carry on operating in secrecy.’
Chief executive of Oxfam GB
New global rules
Despite having different views on desirable levels of taxation, the economists all agree 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.’
To counter this, they are urging governments to agree new global rules requiring companies to publicly report taxable activities in every country they operate, and to ensure all territories publicly disclose information about the real owners of companies and trusts.
‘Tax havens do not just happen. The British Virgin Islands did not become a tax and secrecy haven through its own efforts. These havens are the deliberate choice of major governments, especially the United Kingdom and the United States, in partnership with major financial, accounting, and legal institutions that move the money.
‘The abuses are not only shocking, but staring us directly in the face. We didn’t need the Panama Papers to know that global tax corruption through the havens is rampant, but we can say that this abusive global system needs to be brought to a rapid end. That is what is meant by good governance under the global commitment to sustainable development.’
Director of Columbia University’s Earth Institute