Tuesday, January 26, 2021

Going after the money

Since its demise as an imperial power, and especially its deindustrialisation under Thatcher, the UK's primary economic engine has been its role as a money laundry, using its network of overseas territories as tax havens to enable rich people around the world to steal from the societies they live in. While it was a member of the EU, it was able to protect those tax havens from the sanctions they would normally attract. But now they're out, the European Parliament sees no reason to play along any more, and is going after their money:

The European parliament is pushing for UK overseas territories and crown dependencies, including the British Virgin Islands, Guernsey and Jersey, to be added to an EU tax havens blacklist after the conclusion of the Brexit deal.


The resolution, passed earlier this week by a vote of 587 to 50, included measures calling for the automatic inclusion on the blacklist of countries which use a 0% tax regime. Among these are UK territories and dependencies, viewed by transparency campaigners as havens for tax avoidance.

This is "just" a parliamentary resolution, and the actual decision will be made by the EU Economic and Financial Affairs Council. But there's no reason now for them to ignore the UK's laundry states, and the UK won't be able to directly protect them. As for the impact it might have, there's some evidence that blacklisting results in tax reform, and strong evidence that it damages public companies laundering funds. But since 2019 tax havens have been subject to actual financial sanctions from the EU, and that's the thing that will probably really help.