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Income Tax

The hon. Gentleman perhaps anticipates my remarks a little. The agreements that refer to the territories that we are discussing are frankly a sideshow. I happened to be in the European Parliament when they came through. They were a price that several Ministers paid to get agreement on the more substantive measure and overall taxation agreement. Although it was a necessary price, and some problems that the hon. Gentleman described might arise, the territories do not compete with the major financial centres in the EU because of the extra credit risk that one would undertake if one decided to put all one’s cash in the Cayman Islands rather than London, Paris or Frankfurt. The real point about the information exchange agreement—we very much support it—is not, frankly, the sideshow issues of these rather insignificant territories, but the much more significant failure of the major countries of the Organisation for Economic Co-operation and Development so far to achieve a real agreement on information exchange. The United States Internal Revenue Service, for example, has been extremely successful in persuading the Swiss banks to give it information about American residents who have deposits with the Swiss banks, mainly by applying pressure on those banks through their subsidiaries in New York city. Through such heavy breathing, as it were, the Americans have been extremely effective in ensuring de facto information exchange between Switzerland and the US tax authorities. That is unfortunately not the case with the United Kingdom or with other EU countries, and I very much hope that the Minister can tell us whether a little progress has been made in extending the impact of these tax information exchange agreements not to places such as the Netherlands Antilles, but to the real centres, in which there is a major problem.