Today politicians from around the world will be arriving in London for the anti-corruption summit.
In the wake of the Panama papers, it is more important than ever that governments across the world do more to tackle global corruption and the use of overseas havens to avoid and evade tax. Oxfam and 300 leading economists have urged the government to use this summit to crack down on tax havens once and for all.
The PM has said that he wants “all those at the summit to sign up to the first ever global declaration against corruption that would commit them to working together to tackle it”.
Sounds good but the Panamanian government won’t be attending the summit because they weren’t invited. Nor were the British Virgin Islands.
In fact, despite repeated calls for the prime minister to ensure his own overseas territories and crown dependencies were here, just four days before the summit, the best he could say was that they were “in discussions” with them about their attendance.
And commitments included in draft versions of the summit communiqué seem to have been watered down before the event has even started – crucially, the requirement for a public register of ownership for offshore companies has been reduced to a commitment that law-enforcement agencies can access the information.
Of course, the ambition behind this summit is welcome because global challenges can only be confronted with cross-border co-operation – clearly seen by the progress that has been made by the EU over recent months on tackling tax avoidance where Labour MEPs have pressed the case to fight tax dodging with proposals for new, transparent, country-by-country reporting rules.
If the prime minister is serious about tackling abuses, he would support these proposals in Europe. But Tory MEPs voted against proposals for public country-by-country reporting four times last year and look set to do the same again today.
At the EU level, most people now agree that multinationals should be forced to publish exactly where they make their profits and where they pay their tax.
Full public country-by-country reporting, broken down by every country in the world was a key recommendation of a European parliament report at the end of last year, backed and steered through by UK Labour MEPs.
The European Commission listened to these recommendations, and last month announced that large multinationals operating in the EU will have to publicly report on aspects of their business ranging from the number of employees to the amount of tax paid.
They will have to break these figures down for each member state in which they operate and also those that the EU determines to be tax havens.
That was a major victory. The final proposal is not perfect – we would like to see it cover more companies, and more countries – but it is a major first step in the right direction, and we in Labour will push for it to be improved as it passes through the European parliament.
If Cameron really wants to stamp out the types of aggressive tax avoidance revealed by the Panama papers, he could take immediate action to improve the European proposal.
He could announce that the final rules must apply to British overseas territories and Crown dependencies. That’s what we are calling on him to do.
More than anything, this whole debate shows why we need to work together with our neighbours. There’s no point one country having tough rules if money can be moved to where secrecy prevails.
To be successful, nations must work together if we are to ensure that tax havens don’t deplete our tax revenues. This case should be made ahead of the EU referendum on June 23. If we were to leave the EU, getting tax havens to open their borders will become much harder to achieve.
Our place within the EU gives us a seat at the table to drive the debate, and work with our EU partners to push for changes that are in our national interests and apply to us all. At the summit today, David Cameron needs to get results.
And then it is time for him and his colleagues to work with the European Union to get tough on all tax havens, and not least on the one third that Britain has sovereignty over.
We must all be clear that unless we have a seat at the EU table after June 23, we have little way of keeping the pressure on and having our voice heard.
- Rachel Reeves MP
- Anneliese Dodds MEP
This letter was originally published in The Times Red Box on 12 May 2016