Tax evasion fight a global effort
Premier Dr. Orlando Smith has deftly walked a fine line in recent days.
As United Kingdom leaders have pushed for greater transparency in the global financial industry, the Virgin Islands has once again been thrust into the international spotlight.
Over the weekend, Dr. Smith and other overseas territories leaders met with UK Prime Minister David Cameron and agreed to pursue new transparency measures.
This was a crucial step for Mr. Cameron. As the G8 president, he needed the OTs to be on board in order to push his own transparency programme at the G8 Summit this week in Northern Ireland.
Dr. Smith was right to sign on.
Though we don’t doubt that the vast majority of VI business companies operate within the law, recent reports have painted a picture of a seedy underbelly in the global financial industry. Findings include instances of tax evasion and corruption that feed off the secrecy offered here and in other jurisdictions. In the worst cases, the victims were some of poorest people in the world.
Thus, we agree with Mr. Cameron that greater transparency is needed.
As a major step toward that goal, the UK is proposing central registries, which may eventually become public, that would identify the beneficial owners of companies.
This proposal seems sound. Though some claim that secrecy affords privacy and safety for the wealthy, we would argue that the risks outweigh these benefits.
At the same time, however, it is important to note that steps toward transparency must come as a coordinated global effort — not as a bitter pill force fed to smaller jurisdictions like the VI, which already tend to be unfairly criticised as so-called “tax havens.”
Currently, some mainland jurisdictions, such as Delaware, offer many of the same services for which offshore financial centres are often vilified.
Thus, any effort that singles out OFCs could be disastrous to the territory’s financial services industry: Business would simply leave these shores.
Thus, we were pleased that Dr. Smith publicly raised important points this week: Too often, he said, the VI isn’t recognised for its ongoing efforts to meet international financial standards. Moreover, he added, the territory’s current regulatory regime is already stronger in some areas than some G8 countries’.
In the coming months, the VI will have to persevere in a delicate balancing act.
On the one hand, it must show the world that it is committed to justice and transparency. On the other hand, it must collaborate with other smaller jurisdictions to insist loudly that any changes to the status quo must include all global players, large and small.
In recent days, Dr. Smith has neatly laid the groundwork for this effort.
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