It looks like a sizeable number of the wealthy who want to hide their money are about to be outed. Today, the Treasury revealed that Anguilla, Bermuda, the British Virgin Islands, Montserrat and the Turks and Caicos Islands are to start making their financial information available to the tax authorities in Britain, Germany, France, Spain and Italy.
We pretty sure that there will be some kind of caveat in place to protect people who are salting away their earnings to exotic destinations, but in an oblique political hijacking of the agreement, the chancellor George Osborne piped up. He said: ‘This represents a significant step forward in tackling illicit finance and sets the global standard in the fight against tax evasion.’ Osborne added that he wants governments around the world to do the same and get rid of the ‘hiding places’.
It’s worth noting that becoming ‘more transparent’ doesn’t mean that people can no longer put their money in these places – only that it will be easier to discover who is doing it. The other benefit of course is that anyone using tax havens or shady places to channel money through for criminal purposes can be more easily traced, too.
So exactly what information will be shared? It’s thought that the Overseas Territories will have to automatically give out the names, addresses, dates of birth of account holders, as well as their actual account numbers, how much money they’re holding there, and the details of any transactions to and from the accounts.
At MT, we don’t think this solves the problem of people hiding money. First, these places will remain tax havens. Second, unless every single tax haven in the world agrees to follow the same rules of transparency, the wealthy will simply move their money out of the old tax havens into ones that offer the privacy they’re used to. The same problem applies as here as to the amount of tax paid by large corporations - money will always go where it is best protected.
Still, at least the government gets to look like it is having a crackdown.