TOP ECONOMISTS from around the globe have urged world leaders to end offshore secrecy.
More than 300 leading economists from 30 countries, including Scotland, say there is no economic justification for allowing tax havens.
The letter comes ahead of the government’s anti-corruption summit in London on Thursday, which is expected to be attended by politicians from 40 countries as well as World Bank and International Monetary Fund (IMF) representatives.
Signatories include Angus Deaton, the Edinburgh-born 2015 Nobel Prize-winner for economics, and Mariana Mazzucato, an economic adviser to Scotland’s First Minister Nicola Sturgeon.
The Scottish Government’s former chief economist Professor Andrew Goudie, currently special adviser to the principal of the University of Strathclyde; and Mike Danson, professor of enterprise policy at Heriott-Watt University, also signed the letter, as did Dr Zofia Lapniewska of Glasgow Caledonian University.
They were among 47 professors from British universities to join academics from top global institutions such as Harvard and the Sorbonne. International signatories include Thomas Piketty, author of Capital in the Twenty-First Century; 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.
They united to warn global leaders that tax havens undermine countries’ ability to collect taxes, with poor countries proportionally the biggest losers. Their letter urges the UK to take the lead in ending tax havens, claiming that they are “distorting the working of the global economy”.
They are urging governments to agree new global rules requiring companies to publicly report taxable activities in every country in which they operate, and to ensure all territories publicly disclose information about the real owners of companies and trusts.
Jeffrey Sachs said: “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.”
The economists argue the UK is uniquely placed to take a lead in ending offshore secrecy, as it has sovereignty over about a third of tax havens through its Overseas Territories and Crown Dependencies. More than half of the companies set up by Mossack Fonseca, the law firm in the Panama Papers leak, were incorporated in British Overseas Territories such as the British Virgin Islands.
Oxfam, which co-ordinated the letter, is urging the government to intervene to ensure that Britain’s offshore territories follow its lead by introducing full public registers showing who controls and profits from companies incorporated there.
“The case against tax havens has been made by the world’s top economists,” said Oxfam GB chief executive Mark Goldring. “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. ”
On the day of the summit, Oxfam intends to transform London’s Trafalgar Square into an interactive tropical “tax haven” with dozens of volunteers in business suits playing beach games and relaxing on deckchairs, in a stunt to increase public pressure on the Prime Minister and world leaders to agree plans to end the era of tax havens.
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