Socialist Worker

Britain, the ‘world’s greatest enabler’ of corporate tax avoidance

by Charlie Kimber
Issue No. 2656

The government helps the rich hide their profits

The government helps the rich hide their profits


Britain with its “corporate tax haven network” is “by far the world's greatest enabler” of corporate tax avoidance, research has claimed.

British territories and dependencies made up the four of the top ten countries that have done the most to “proliferate corporate tax avoidance” on the Corporate Tax Haven Index.

Britain itself is ranked 13th on the list, which was published by the Tax Justice Network on Tuesday.

The index scores each country's system based on the ease with which bosses can avoid paying what they owe.

Topping the list was the British Virgin Islands, followed by Bermuda and the Cayman Islands—all British overseas territories.

Jersey, a Crown dependency, was seventh on the list behind the Netherlands, Switzerland and Luxembourg, with Singapore, the Bahamas and Hong Kong completing the top ten.

The network said that through its network of satellite jurisdictions, Britain bears the lion's share of responsibility for the "breakdown of the global corporate tax system".

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It added that Britain accounts for “over a third of the world's corporate tax avoidance risks”.

The index looks at the way states aggressively use tax cuts, loopholes, secrecy and other mechanisms to attract multinationals.

The Tax Justice Network said the scale at which jurisdictions have enabled corporate tax avoidance risks to entice multinationals has made countries' formal corporate tax rates "meaningless".

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It warned that this had also triggered a “race to the bottom” which will further deplete tax revenues.

Chief executive Alex Cobham said a handful of the richest countries have waged a world tax war "so corrosive it had broken the global corporate tax system beyond repair".

He added, “The ability of governments across the world to tax multinational corporations in order to pay teachers' wages, build hospitals and ensure a level playing field for local businesses has been deliberately and ruthlessly undermined.

“To curtail the corporate tax avoidance that costs hundreds of billions of dollars every year, governments must finally deliver international rules that ensure profits are declared, and tax paid, in the places where real economic activity takes place.

“Corporations should be taxed where their employees work, not where their ledgers hide.”

The British government is ruthlessly tough on any suspicion of benefit “fiddling”. But it encourages the incomparably greater tax scams of the powerful.

Multinationals and the rich are very good at finding ways to avoid and evade taxes. A tenth of global wealth is held in tax havens.

Changing that requires a war on all the mantras of the last 40 years about the need to slash taxes to attract companies and reward those at the top.


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