LONDON — As Britain readies itself to trigger Article 50, it appears to have given up on seeking EU allies for the negotiations to come, threatening instead to turn itself into a full-blown tax haven. This is a worrying sign of the number of paddles with which Prime Minister Theresa May has equipped herself for the planned expedition up Brexit creek.
As many of those sitting across the table from the British prime minister know, turning the U.K. into a tax haven will cause more damage inside the country than it will across the Channel. Indeed, if the May government carries out its threat to be a bad neighbor, it is the remaining 27 EU countries that stand to benefit.
Tax havens share three broad characteristics: financial secrecy, which allows companies to hide their income and assets from those who might wish to tax them; loose tax rules and low tax rates, which provide incentives for companies to shift profits to the haven; and loose financial regulations, which provide mechanisms facilitating the laundering of funds.
By these measures, the U.K. is already well on its way to becoming a tax haven. Britain has long off-shored its secrecy to the Crown Dependencies and Overseas Territories, places like the Cayman Islands, Jersey and the Isle of Man, rinsing the funds of traces of their origins before they flow to the City of London. If this network of secrecy is considered as a single entity, it sits at the top of the Tax Justice Network’s financial secrecy index as the biggest threat to global financial transparency. (more...)
|Say buh-bye to your bad neighbor.|