PM May must not tar offshore financial services with BHS brush
Theresa May must steer clear of tarnishing the offshore financial industry’s reputation following the recent BHS scandal.
In a recent interview with The Times, the British Prime Minister spoke out regarding a crackdown on the use of offshore tax havens by individuals and companies, within her bid to ‘reform capitalism’.
However, I would urge Mrs May not to blacken the image of the offshore financial services industry because of the BHS allegations.
I have long been a defender of the international financial services industry. Indeed, I was extremely vocal when the Panama Papers furore broke in April, writing a column in The Guardian, the world’s third most read news site, and a whole host of other media.
Whilst of course, the situation regarding BHS brings the very real and serious issue of global tax evasion to the fore, the PM needs to be careful about putting the entire industry under the same umbrella. It would be unfair, damaging and hypocritical to do so.
Unfair, why? Because whilst it would be naïve to believe that a certain amount of wrongdoing does not exist in the offshore industry, which is the case in all industries, the vast majority of the sector offers products and services that are wholly compliant and within the law.
In the same vein, the vast majority of those who use such products and services have no criminal intent, and are merely searching for better investment returns, greater options and more flexibility.
Damaging, why? Because global financial centres play a crucial part in the global economy in several key ways.
As an example, they assist companies in avoiding double taxation on the same income; they help to expedite maximum allocation of capital; encourage an investment and savings culture; and because of their competitive tax systems, help to promote lower tax policies in other parts of the world.
Additionally, they offer legitimate financial refuge for those residing in countries where economic instability presides as well as political uncertainty and persecution from leaders.
Hypocritical, why? Tax havens are not always the old fashioned ‘treasure islands’ of years gone by. Take into account the UK – the country is a major tax haven for Chinese and Russian nationals, with the aim of attracting foreign investment.
To conclude, any corruption must be fought with a focused, global approach. However, it’s crucial not to presume all offshore financial centres are corrupt. On the contrary, the majority of global financial hubs are well-regulated, compliant and transparent.