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The UK’s choice: haven or tax haven

by
01 July 2016

If the UK wants to be a world power, says Eric Gutierrez, it must make the right choices about global finance and refugees

IT HAS been easy over the past week to sink into gloom, especially if you are among the 16 million who voted Remain. The uncertainties that have opened up about politics and the economy in the UK, the deep national divisions that have been exposed, and the sad prospect of further splits, if Scotland and Northern Ireland decide to go their own ways — all seem like plausible reasons to be fearful.

Consider this, however: the UK has many powerful connections with the world beyond (and within) Europe, through international institutions and politics, trade, scientific co-operation, history, culture, and countless millions of ties of family, friendship, faith, and the human desire to help others in trouble.

Despite Brexit, the UK remains the world’s fifth-largest economy, and a member of the UN and its Security Council, not to mention NATO, the G20 and G7/8, and the Organisation for Economic Co-Operation and Development.

The UK also has many threats and challenges in common with the rest of the world (including countries within Europe): think of migration, climate change, terrorism, tax-crime, corruption, and the drugs trade.

These and other connections and problems, shared with other countries, will remain, despite Brexit. If the UK makes good choices over the next few years, they will help to anchor the country firmly in the international community, and to enable it to remain a respected force for good in the world.

 

ONE litmus test of what lies ahead will be the British Government’s stance towards the law that dedicates 0.7 per cent of national income to helping people living in poverty overseas. All the main political parties supported the creation of the law, precisely in order to ensure that changes in government did not cause U-turns on aid.

Retaining this law will assure developing countries that receive British aid of continuity, while moves to remove it will increase uncertainty about Britain’s new place in the world.

Aid is, however, only one of the many ways in which the UK exerts its influence, for better or for worse. In recent years, David Cameron has helped to lead other countries, within and beyond Europe, away from the financial secrecy that is so useful to the world’s corrupt people, the criminals and the tax-shy.

Regardless of who follows him as Prime Minister, the UK can and should retain this international leadership, for the sake of its own people and those around the world. The vast majority of us lose when the corrupt steal public money.

There are many opportunities for the UK to push things in the right direction in relation to international financial transparency. Only this week, MPs have voted on a small but powerful change to British law, which could help tax authorities all over the world to collect more of the revenues that they are owed by multinational companies. Developing countries need such help especially urgently.

Passage of the amendment will affirm the UK’s leading part in tax reforms. Inaction or rejection will build fear that efforts towards a fair sharing of the benefits of growth have taken a knock.

 

IN A disturbing contrast, there are some who have started to argue that the best solution to looming economic uncertainty is to transform the whole of the UK into something closer to a tax haven than it is already, with high secrecy and low rates of tax. It is worth noting that Britain’s constitutional backyard includes places such as the British Virgin Islands and the Cayman Islands, which are already full-blown tax havens.

Peter Hargreaves, a billionaire and significant donor to the Leave campaign, has suggested that Singapore might be a useful model for the UK after Brexit. Singapore is one of the most secretive tax havens on the planet, but Mr Hargreaves has described it to journalists as “the greatest economy in the world”.

Rohan Silva, an entrepreneur and former adviser to Mr Cameron, has suggested that deep tax cuts, including slashing corporation tax to ten per cent, should be part of the way forward for the UK. And the tax barrister Jolyon Maugham has warned that, once the UK has left the EU, where the rules prohibit “state aid” to companies, it will be harder to resist the multinationals’ demands for giant tax breaks.

The prospect of the UK’s metamorphosing into a low-tax, high-secrecy country has sent chills down the spines of everyone who knows the human cost of the crimes facilitated by tax havens. Tax evasion and corruption weaken the public services on which human flourishing depends — hospitals, schools, and justice systems, to name a few.

For the UK to decide to side with the world’s kleptocrats, tax-evaders, and money-launderers, against “ordinary” citizens everywhere, would be unthinkable, and something that the Churches should condemn.

 

PERHAPS the most important international signal from the UK’s new leaders will be their response to the refugee crisis — the biggest displacement of people in Europe since the Second World War. It was British lawyers, inspired by Christian principles, who drafted the 1951 UN Refugee Convention, which still governs countries’ treatment of people seeking asylum.

UN figures suggest that, today, poor nations such as Lebanon and Iraq host 86 per cent of all the world’s refugees, while the UK is among a handful of rich countries that host fewer than five per cent of them.

As the former Archbishop of Canterbury Lord Williams, who now chairs Christian Aid, has argued, the UK must not turn a blind eye to the refugee crisis in Europe (News, 24 June). It can and must do more to help people who are fleeing horror in their home countries, and, Brexit notwithstanding, should take its fair share of refugees.

I can only echo Lord Williams’s words: “Rather than treating people with hostility and disdain, we must recognise that every neighbour is our neighbour, and that we have it within ourselves to respond with compassion and welcome, and to offer an opportunity for people to rebuild their lives.”

Many of those upset by Brexit can still respect UK voters’ decision to leave the EU. But their respect for Britain as a friend, or a country with which they can sort out global problems, will be eroded, if the direction of travel on aid, financial transparency, and migration is reversed. Let us hope that Britain’s commendable solidarity with the world’s poor people will hold.



Eric Gutierrez is Senior Governance Adviser at Christian Aid, and has lived in the Philippines, Malawi, South Africa, and Germany. This article represents his personal views, and not necessarily those of Christian Aid.

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