Comment: The UK, its tax havens – and Switzerland
In the new era of financial morality – and mortality - Alistair Darling, the UK Chancellor of the Exchequer, reckons Switzerland should bear the brunt of the growing worldwide crackdown on so-called tax havens and end banking secrecy.
In an interview in the Observer, a UK Sunday newspaper, he said: “I think it’s important there is transparency…It’s one of the things Switzerland has got to address. If it wants to be part of the international community, it’s got to be open.”
Switzerland has become an easy target for politicians. Citizens in big industrialised economies like Britain - and the US - see it as a place where rich people stash their cash and skip paying tax. These notions are tied up with the rising popular sentiment against greedy bankers and shady billionaires.
Politicians - and the Western media - are increasingly pandering to the public’s odium by upping their rhetoric against it. Not being part of a protective political and economic block like the European Union makes the landlocked country in the centre of Europe acutely vulnerable to attacks by governments like the UK.
Switzerland’s confidential banking system also provides easy pickings for politicians like Darling who are anxious to divert their electorate’s attention away from a deteriorating domestic economic situation.
But the UK might be well advised to look a little closer to home when it comes to attacking offshore centres.
Out of a list of 31 “tax havens” identified by the Organisation of Economic Cooperation and Development, the UK controls nine of them - Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Guernsey/Sark/Alderney, the Isle of Man, Jersey and the Turks and Caicos Islands.
Nick Cohen, who happens to be a columnist for the Observer, added that a further 15 tax havens are former British colonies - Antigua, the Bahamas, Barbados, Belize, the Cook Islands, Cyprus, Dominica, Grenada, Hong Kong, Malta, Nauru, St Kitts and Nevis, St Lucia, St Vincent and Singapore.
The Obama administration has placed Cayman, where a range of hedge funds are registered, at the top of its list of abusive tax havens. Alleged fraudster Sir Allen Stanford, a former friend to the English cricket establishment, had his business headquarters on Antigua.
Tax exiles regularly pop up as UK political party funders. UK non-domiciled resident status amounts to one of the smartest tax wheezes in the world. It has helped to make London as cosmopolitan city and the people shelter behind it have greatly contributed to the renaissance of the UK economy following the privations of the 1970s.
In November, Darling promised that the UK government would look into its tax havens and release provisional findings into these centres with the release of its next budget. Its findings will need to be broad and conclusive if the UK government wants to avoid being accused of gross hypocrisy. But the betting is that it will chicken out of fundamental reform, just as it has done on many occasions in the past.
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