Despite having different views on desirable levels of taxation, they all agree that territories allowing assets to be hidden in shell companies or which encourage profits to be booked by companies that do no business there are distorting the working of the global economy.
To counter this, these economists called for governments to agree new global rules requiring companies to publicly report taxable activities in every country they operate, and to ensure all territories publicly disclose information about the real owners of companies and trusts.
One of the signatories, Jeffrey Sachs, an adviser to the UN’s secretary general, wrote in a commentary in The Guardian UK newspaper that Cameron’s job at the summit “is not to whisper about the corruption of Nigeria and Afghanistan but to end the deep and historic role of the United Kingdom in this sordid mess. Ditto for the U.S. and other major parties to the abuse.”
The letter came ahead of the annual Anti-Corruption Summit, which held Thursday last week and attracted heads of state and government ministers from 40 countries.
Perhaps the most important achievement, at least in David Cameron’s view, was an agreement to publish a register of who really owns what companies. That has been a major goal of global anti-corruption groups. But only six countries at this point have signed on to this agreement: Britain, France, the Netherlands, Kenya, Afghanistan and Nigeria. Canada has not signed on, and it is unclear whether the agreement will apply to Britain’s overseas territories.
One of those territories is the British Virgin Islands. According to the Panama Papers, it is one of the most popular tax havens in the world, with a population of 28,000 and more than one million registered companies. But its officials have indicated they have no intention of taking part in any British-sponsored public register of who own what.
Jeff 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.”
Signatories who signed the letter include Thomas Piketty, author of best-selling ‘Capital in the Twenty-First Century’; Angus Deaton, current Nobel Prize winner for Economics and Nora Lustig, professor of Latin American Economics at Tulane University, as well as influential experts with experience of advising governments and policymakers, such as Jeff 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.