Yesterday morning I attended the Liberal Democrat treasury team meeting in my capacity as a parliamentary researcher. Paying a visit were some representatives from the banking sector, who were there to give high-profile members of the Liberal Democrats – the party currently at the forefront of attempts to close down tax havens, or secrecy jurisdictions as they are better termed – a bank’s eye view.

In the course of discussions, the issue of Tesco avoiding/evading £billions in stamp duty arose. At this point, one of the bank representatives launched into a lecture which went roughly like this:

“Ever since stamp duty has existed, companies and individuals have tried to avoid paying it. After all, if registering in one place means you incur 4.5% stamp duty, and registering in another place means you incur 0.5% stamp duty, well companies will register in the latter. It’s just the way it works.”

I’m pleased to say that a high-profile member of the Lib Dem treasury team interrupted at this point, quite angrily, and replied:

“Don’t you get it? 99.9% of people on this planet can see that a company the size of Tesco using elaborate means to avoid paying taxes in the UK is just wrong. It’s wrong. Can you not see that?”

The bankers stared back, confused. No, they just couldn’t see it.

This incident is instructive, for reasons I will get to shortly.

Last night I happened to attend a meeting entitled Tax Justice Not Tax Havens, hosted by the Tax Justice Network, War on Want and The Public Services and Communications Union. The meeting covered both domestic and international tax issues, with contributions from Richard Brooks, Dave Bean, John McDonnell MP, Richard Murphy, Ruth Tanner, and Hugh Lanning.

It was a very productive evening for many reasons, and actually left me feeling very positive about the potential to tackle tax havens, and in turn influence public discourse on domestic taxation.

Of particular interest was the issue raised by Richard Murphy (one raised frequently on his blog), namely that many people in positions of power are “trying to put humpty dumpty back on the wall”. In other words, they think the world can go back to how it was c. August 2007. They think that if the banking system can just get the right bailouts and start lending again, then the world won’t need drastic economic and financial overhaul in order to emerge from what will be the worst recession in living memory.

In particular, Number 10 still see this crisis as a banking crisis. As a consequence, Brown is surrounding himself with bankers and banking experts. This has already been much criticised by Simon Jenkins (and here)

By being enthralled by bankers, Brown is surrounding himself with people who not only have a vested interest in the continuity of secrecy jurisdictions (cf Barclays gagging The Guardian last week to prevent them revealing the extent to which the bank has avoided tax), but people who just don’t see what the problem is. 

These people just don’t see what is wrong with a world in which developing nations lose £250 billion every year – money which could meet the UN’s Millennium Development Goals several times over, and dwarfs the total aid budget from developed to developing world each year. They just don’t see what is wrong with the UK losing £100million a year through tax dodging – and why it is wrong for little people like us to make up the shortfall.

Gordon Brown is currently jetting around the world demanding that secrecy jurisdictions (tax havens) enter into “information exchanges” with Governments and by implication the little people (like you and me) who pay taxes. Upon closer inspection, this is virtually meaningless.

Firstly, “information exchanges” between tax havens and governments don’t by themselves achieve anything. To quote Richard Murphy last night, in the past 8 years Jersey and the USA, who operate an information exchange have succeeded in exchanging…5 pieces of information.

Secondly, even if “information exchanges” led to a wealth of knowledge about what tax havens are up to – that’s not the point! The point is to stop them from doing what they are doing. Namely, facilitating tax avoidance and evasion, defrauding tax payers in developed countries, defrauding developing nation governments and thus preventing proper development, facilitating capital flight from developing nations which keeps the world’s most vulnerable people in abject poverty, providing safe money-stashes for drug dealers, people traffickers and international criminal gangs, and providing the finance structures for terrorist organisations.

99.9% of people can see this is just wrong.

And the worst thing of all is that the situation could so easily be improved. By the UK. Acting alone. (We are, in case you didn’t know, one of the absolute worse offenders when it comes to secrecy jurisdictions).

As Richard Murphy writes, Gordon Brown should do the following:

1. The UK should admit that the Crown Dependencies and Overseas Territories are ours – as the current crisis in The Turks & Caicos have proven in the last week, and that we can therefore reform them;
2. Publish the terms of reference for the Foot Commission into UK tax havens so we know that reform is going to happen;
3. Announce that the forthcoming banking code will compulsorily ban banks from undertaking structured tax avoidance;
4. Announce that this ban will be extended to all UK companies through a general anti-avoidance provision being enacted in the UK;
5. Support the call for country by country reporting which will make all companies go on record about their use of tax havens;
6. Announce an end to HMRC redundancies so the resources are available to deal with automatic information exchange which we so badly need;
7. Announce unconditional support for the amended EU Savings Tax Directive which would shatter the use of offshore structures in many places – and that we will impose this on our own tax havens, as we can.

All of that is possible.

None require international support.

All would offer clear indication of leadership that would set an example to all at the G20, and all those watching it.

But Brown won’t do it. Why? Because he is trying to put humpty dumpty back on the wall, surrounding himself with that 0.1% of people who not only have a vested interest in the continuation of a financial world with secrecy jurisdictions at its heart, but people who just don’t get what us little people are complaining about.