There has been much talk of the threats from the British Chancellor to turn the UK into a full-blown tax haven post-Brexit if the European Union doesn’t give it a good trade deal. We discussed ‘Brexit threats’ in our January podcast. Now our Director Alex Cobham has written an article for Politico on how, contrary to how it may appear, Brexit actually gives Brussels more power to address British tax and financial secrecy.
First of all he points out it is quite mistaken to think that the UK isn’t already well advanced down the tax havenry route. In fact if Britain and its network of ‘satellite tax havens’ were put together, it would top our Financial Secrecy Index as the biggest threat to global financial transparency.
But that’s not to say it couldn’t go further. Much further. And as Alex Cobham says in Politico, indulging in this tax and regulatory race to the bottom is an ‘own goal:’
“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.”
He goes on,
‘a tax and regulatory race to the bottom would undercut public services, exacerbate inequality and depress long-term growth’.
You can expect much more research and analysis from us in this area which threatens to move the world into an unprecedented era of subsidised capital.
In the meantime, read more on how Brexit actually strengthens the EU’s hand when it comes to addressing the British threat here.