Market leading insight for tax experts
View online issue

There are too many tax havens, says Cameron

printer Mail

Tax campaigners at Christian Aid have welcomed David Cameron’s ‘backing for tax justice’ after the prime minister announced that next year’s G8 conference in Northern Ireland will address the ‘growing problem … that some businesses and some individuals hide their taxes away and don’t pay them fairly’.

‘There are too many tax havens, too many places where people and businesses manage to avoid paying taxes,’ Cameron said on a visit to a NACCO Materials Handling factory in Craigavon.

Cameron’s coalition partner Vince Cable, the business secretary, told the Liberal Democrats’ conference in September that tax havens were ‘sunny places for shady people’.

‘We’re all in it together … means cracking down hard, not just on criminal tax evasion but on abusive tax avoidance. It means working with our allies to close down tax havens, because nobody thinks they’ve cash in tax havens for the quality of investment advice,’ Cable said.

Cameron said on Tuesday: ‘Now, I’m all for low taxes, I want low tax rates, including low tax rates right here in Northern Ireland – that’s one of the ways we are going to attract investment. But it’s not right if you have businesses instead of paying some taxes somewhere are paying no taxes anywhere. And the G8 – when the world’s most powerful and important countries come together – I think can help to crack that problem.’

Cameron’s announcement came days after Andy Street, managing director of John Lewis, called on the government to examine the UK taxation of foreign multinationals. Companies based in tax havens would ‘out-invest and ultimately out-trade us’, he warned in an interview with Sky News.

‘Key global issues’

Christian Aid’s director Loretta Minghella said: ‘We’re tremendously excited that the prime minister has committed to put issues of tax justice at the centre of the G8's agenda. These are such key global issues and so important to the lives of people living in poverty across the world.’

She added: ‘If companies paid the taxes they owed, it would release many billions every year for schools, hospitals and all the other services which allow people to have decent lives. It will help tackle hunger in the world's poorest places and in the long term, free developing countries from their dependence on aid.

‘But let us not underestimate the challenge of overturning the global financial secrecy which underpins the status quo and makes life easier for tax dodgers and others with money to hide. It will take tough, determined action by the prime minister and G8 members to usher in a new, more transparent era.’

Alex Cobham, head of research at Save the Children UK, was previously chief policy adviser at Christian Aid. He tweeted: ‘Fantastic to see David Cameron put tackling tax secrecy at the centre of G8 2013 agenda.’

ActionAid’s head of advocacy, Melanie Ward, said: ‘The need for international action to combat tax dodging has never been clearer. As we have seen in the UK and around the world, developed and developing countries alike are haemorrhaging vital resources into tax havens.’

Philip Booth, a director at the Institute of Economic Affairs, has argued that ‘tax havens are in fact essential, especially international financial centres’.

Writing in the Sunday Telegraph last week, Booth said ‘most predatory activity’ was undertaken by governments and not by companies. ‘Governments are trying to spend more and more … This is deeply damaging to general welfare and business in particular and it is very difficult to hold the elites who continually expand the size of the state to account. Elections are very imperfect mechanisms,’ he said. ‘One effective method by which we can keep the size of government in check is if labour and capital can exercise its freedom to move to lower-tax jurisdictions.’

Campaigners argue that tax havens undermine democracy. ‘They wreck competitive markets,’ the Tax Justice Network has said. Last year the TJN claimed that the UK would ‘easily’ rank number one in a ‘financial secrecy index’ if the ‘British network of secrecy jurisdictions’ were taken into account.


Cameron confirmed that the UK government is still considering devolution of corporation tax powers to Northern Ireland. ‘We need to keep tax rates down, and I know there is a big debate about whether we can have a lower rate of corporation tax here in Northern Ireland. We’re looking at that issue closely,’ he said.

Last month David Gauke, the exchequer secretary, told MPs: ‘The ministerial working group has made real progress on understanding the practicalities and potential impacts of the devolution of corporation tax to Northern Ireland. The group will report its findings to the prime minister soon.’