Thread: The EU and tax havens

Well this just won’t go away will it. After a meeting on Sunday 22nd February this year in Berlin, it was decided to create a list of tax havens as well as so-called uncooperative states before the G20 meeting in London.

The Berlin summit was hosted by Frau Merkel, and attended by the not so great and the not so good including European Commission President Jose Manuel Barroso along with European Central Bank chief Jean-Claude Trichet and Bank of England governor Mervyn King, as well as the leaders of France, Britain, Spain, the Netherlands and Italy. Phew, what a line up, I wish I had been there don’t you dear reader? After all, if you or I had been there, then perhaps a real decision might have been made. Oh wait, silly me, we would have been outvoted, out prevaricated and out pontificated.

With staggering pomposity and, would you believe, completely straight faced, a German government spokesman said on the Monday that the EU leaders now hoped to extend the points of agreement at Sunday's meeting to all EU member states. However, a source from Brussels tells me this is but the start. The Germans are getting very twitchy about having to bail out just about every other country within the Euro zone and have decided to use this opportunity to clamp down, if they can, on some of the smaller nations around them and around Europe generally, I don’t think any further comment is required here, do you?

This meeting seems to have gathered an accord of sorts, to pile the pressure on tax havens as part of a push to overhaul the global financial system in the wake of the world economic crisis. They also called for sanctions against ‘uncooperative jurisdictions’. One wonders how alone and isolated the attendee Luxembourg Prime Minister Jean-Claude Juncker felt at this point. He certainly couldn’t rely on the cursed son of the manse, even though London has been targeted by successive EU ministerial statements.

A week later the French President Sarko followed up on all this by stating that the G20 group will crack down on tax havens. Now let’s just think about this for a moment. The meeting in Berlin went so far in its ambition then Sarko unilaterally takes it a stage further. We all know he sees himself as the new age leader of Europe, but of the whole G20 group? Do me a favour. As if this wasn’t enough, in a press conference following his grandiose statement Sarko was asked if these ‘uncooperative jurisdictions’ would include Switzerland, to which he replied that “based on the actual state of things and on the rules, it could be yes.” It seems no one is safe from our Sarko’s beady eye. However, it must be pointed out that Frau Merkel did offer a slightly more mollified tone telling reporters, “So far I don’t have a concrete idea about such a list. But I think the better we are in talks with each other the smaller the likelihood of such a list”. Well there’s some double speak if ever I heard it, and quite frankly, I wonder of she actually said anything! One should be aware that other factors influence this non-statement. Merkel’s finance minister Peer Steinbrueck, said in October that Switzerland should be placed on the OECD list of bad boys and girls, with said list being ready for May or June of this year along with ‘proposals for retaliation’. Germany has national elections in September of this year and Merkel heads the Christian Democratic Union while Steinbrueck is a member of the Social Democrats, which are fielding Foreign Minister Frank-Walter Steinmeier as their chancellor candidate.

Meanwhile, the softening up process of the UK electorate continues with reports being released of varying amounts of tax revenue being lost through the use of offshore financial centres such as the Isle of Man. The TUC now seems to be leading the charge in this battle with newspaper reports quoting TUC General Secretary Brendan Barber as saying "The mechanisms of tax avoidance are always hard to understand, but this is a very simple story. If the super-rich held their money and assets in the UK they would contribute at least £4bn extra. This would be enough for the government to meet its target to halve child poverty by 2010. It would also mean that instead of being squirreled away in tax havens, it was being spent in the real economy here helping us fight recession." You got to watch those squirrels and their squirreling haven’t you. I would agree with him, but for the fact the incumbent UK Government has shown itself to be a very poor manager of resources and I doubt if any of those savings would see the light of day in action against child poverty.

More seriously, it seems UK MPs are planning to call on ministers to disclose how much the offshore subsidiaries of taxpayer-funded banks were costing in lost revenue.

Though Josh did not provide a link I did not think it was he who had written the piece concerned, FWIW.