A year on, fight against tax havens far from over

A year after leaders at a summit of the G20 nations declared an end to the era of bank secrecy, most of the countries targeted as tax havens have, one by one, been taken off the list of offenders.

But for many critics, the banking world is still a long way from financial transparency.

"Not everything is perfect yet but there has been considerable progress," said François D'Aubert, president of the working group set up by the Organisation for Economic Cooperation and Development (OECD).

His group was given the task of evaluating "non-cooperative jurisdictions," those reluctant to break traditions of bank secrecy when asked for information by other states about possible tax evaders.

On paper at least, the figures suggest there has been progress.

Of the 42 territories originally listed as offenders in an OECD list released a year ago, only 17 remain, mostly small islands in the Caribbean or the Pacific.

The likes of Luxembourg, Monaco, Singapore and Switzer-land have all been given a clean bill of health.

What shortened the list of offenders was a series of agreements with the various countries on the exchange of tax information, agreements that were far more extensive than before, said D'Aubert.

For French President Nicolas Sarkozy, that was enough to do the job.

"There are no tax havens any more," he declared last September.

But for many of the campaigning groups that follow the issue, he spoke to soon.

Rather than the OECD list, they prefer one compiled by the Tax Justice Network, a network of associations campaigning for greater transparency in international finance.

Their list still has 60 different territories operating as tax havens, including many of those given a clean bill of health by the international community over the last 12 months.

They include the City of London, the US state of Delaware and Hong Kong.

French campaigners, the Catholic Committee Against Hunger and for Development (CCFD), are sceptical of the "official version" as set out in the OECD list.

Far too lax

In a recent report, they calculated that the 17 countries still on the OECD list represent only 0.25 per cent of the world market in offshore financial operations. The OECD criteria were far too lax, they argue.

"What we have today are completely empty lists and the promised OECD evaluation will stretch as far as 2014," said Jean Merckaert, who heads up the CCFD's team investigating tax havens.

For Merckaert, the G20 committed a strategic mistake of focussing their effort on the actual territories, when in reality, physical locations count for little.

"What counts is to call for transparency from the users and the intermediaries" of the tax havens, he argued.

Ronen Palan, Professor of Inter-national Political Economy at Birmingham University, England, takes a similar view.

"Western governments have put the stress on tax evasion, to recover the tax receipts they are badly lacking and to fill their deficits," he said.

But the agreements the various countries signed to get themselves off the OECD list of offenders were far from being effective on that score and there has been no noticeable drop in tax evasion.

And to get a country to hand over information on an individual or company accused of fraud, you still have to first of all identify the target and justify the request, he added.

But the whole point of tax havens is that such information is not easy to obtain and that one does not really know what is going on.

For Palan, the solution is to make the exchange of information automatic and for international regulation in this area to cover all countries.

D'Aubert has promised to look into NGOs' findings.

- AFP