Financial Transparency Coalition

This report is the first that PCS has produced on the subject of tax havens. It has prepared it for four reasons. First, PCS is committed to a fair, progressive tax system. It sees tax havens (or secrecy jurisdictions as we prefer to call them) as a threat to the establishment of such a
system. This report notes that the UK might lose up to £18 billion a year as a result of the use of tax havens. This loss contributes significantly to the overall UK tax gap that PCS believes currently amounts to at least £120 billion.

Second, it believes that all initiatives to tackle tax haven abuse to date have failed, and wishes to contribute to debate on how that record can be corrected.

Third, PCS wishes to draw attention to the massively worrying trends in UK taxation, all put in place since 2009, which mean that far from tackling tax haven activity, the UK Government is now actively encouraging such activity on the part of multinational corporations based in the UK. Furthermore, because of the international tax agreements it has reached with them, it is also actively promoting the use of the financial services industry in both Switzerland and Liechtenstein
for tax avoidance and evasion purposes.

Fourth, and of particular concern as it appears to have been almost entirely ignored elsewhere, PCS has concern that whilst eliminating tax haven abuse is the right thing to do, such a policy must take into consideration the local populations of those places that have been tax havens, many of whom have worked in the financial services sector as it has been the only source of employment available to them. It is PCS’ opinion that these people should not suffer as a result of required changes in policy and as such we argue very strongly that those locations willing to reform their tax haven practices should be given support to protect jobs and livelihoods as they pass through a period of transition in their economies.

In support of these arguments, and as the report makes clear, the key service that tax havens supply is not low tax or light regulation, but secrecy. For this reason the report refers to the locations about which it has concern as secrecy jurisdictions in addition to the more common term ‘tax haven’. PCS has accepted the opinion of the Tax Justice Network in defining secrecy jurisdictions as places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain. This regulation, this report argues, is designed to undermine the legislation or regulation of another jurisdiction by creating a deliberate, legally backed veil of secrecy that ensures those making use of a haven’s services cannot be identified.

For more, please download the PDF.