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Tax Avoidance and Evasion

There is a slightly 1960s feel about how we describe the multinationals. If the hon. Gentleman goes to Khartoum, Freetown or Dar es-Salaam, he will find that the major new investors seeking the best fiscal arrangements are Chinese or Russian. Most African countries will seek to attract those companies—whether they be from China or elsewhere—by giving fiscal incentives. My next point relates to tax havens, but I will try to be brief because I am conscious that others wish to speak. If the UK Government believe that something is wrong with tax havens, they are probably in the best position to sort it out because a large number of them are UK overseas territories. In part, UK overseas territories, such as the Turks and Caicos, the Cayman Islands and Bermuda were encouraged by successive UK Governments to go into banking and financial services as a means of becoming self sufficient. That also applies to the British Virgin Islands and, to a lesser extent, Anguilla, Montserrat and Gibraltar. I have never been entirely clear as to the constitutional status of Guernsey, Jersey and the Isle of Man. None the less, if it is being said that there is something wrong with tax havens, it is within the gift of the UK Government to take action. After all, they managed the constitutions of all of those overseas territories. The Government have decided to return the Turks and Caicos to direct administration under the governor, but that is because of allegations of corruption and nothing to do with it being a tax haven. I am slightly surprised that the Chancellor has proclaimed at the G20 and elsewhere that they will take action on tax avoidance and evasion because many of the tax havens are under UK jurisdiction. Therefore, if action needs to be taken against tax havens, it is within the gift of the UK Government. However, if we are going to take action, it should be based on evidence. We should not put developing countries in a position in which they are being accused of being the authors of their own misfortune. There is a danger of giving an alibi to developed countries to cut back on their assistance to developing countries on the grounds that if only developing countries took the necessary action to increase their own tax yields, they would be in a far better position. If we say that the amount of taxation in developing countries is roughly one and a half times the amount of annual global aid from rich countries to poor, we will see where that argument goes when the developed world is under pressure.