Martin Hearson argues that whilst David Cameron will receive a significant political boost from the media portrayal of his global leadership on tax evasion, nothing agreed at the G8 is in itself likely to make a big difference to tax haven secrecy or to developing countries. Importantly, there were no commitments on public registers for beneficial ownership.
The Enough Food for Everyone If campaign – successor to Make Poverty History – has succeeded in making tax haven secrecy the centrepiece issue of public debate around the G8 summit, which closed yesterday in Enniskillen. It also chalked up a genuine success, in pushing the UK’s overseas territories to join a multilateral initiative to share tax information.
But what emerged from the summit itself (and indeed, what David Cameron proposed ahead of it) was a set of ten ‘principles’, with no concrete commitments beyond endorsement of developments already taking place through the G20 and OECD. “The public argument for a crackdown on tax-dodging has been won but the political battle remains,” said the IF campaign. This outcome is not illogical, because competency on tax most definitely resides with those other organisations, rather than the G8. Indeed, some of the developing countries in the G20 would likely bristle if asked to implement a decision taken by the G8.
Over the past few days, it became increasingly difficult to distinguish the campaigners’ messages from those coming out of the government. This demonstrates a real success on the part of campaigners in shifting the public debate. As Melanie Ward, of development charity ActionAid and the IF campaign, wrote yesterday, “at points it was bizarre watching David Cameron, the UK prime minister, use language that could have been written by those working in development agencies.”
The fight against tax haven secrecy was portrayed as Cameron’s personal mission in much of the media coverage, not least a Guardian interview on the eve of the summit. “The PM appears increasingly isolated in his bid for a tax evasion clampdown as world leaders hold talks at the G8 summit” said Sky News. But the adoption of campaign rhetoric by politicians comes with risks, too. I’ve argued before that in the tax debate, it’s very easy for governments to say one thing in public and do another behind the scenes. The political yield for Cameron from the media portrayal of his global leadership on tax evasion will have been significant, and yet as campaigners have been saying, nothing agreed at the G8 is in itself likely to make a big difference to tax haven secrecy or to developing countries. In particular, there was no commitment to making public registers showing the beneficial ownership of companies, to help track down offshore income.
This puts me in mind of a couple of other headline-grabbing international summits. In 2009, Gordon Brown hosted the London G20 summit in the midst of the financial crisis. That summit has been back in the news because of the allegations of espionage, but there was something interesting in the Guardian’s account of how Brown did achieve a breakthrough:
“The key to Brown’s approach was to build up momentum before the summit behind the stimulus he and the newly elected Barack Obama favoured. The European participants met in February 2009 in Berlin in an attempt to reconcile their internal differences. Brown also travelled further afield to the US, Brazil, Argentina and Chile in the days immediately leading up to the summit to build up a loose coalition behind the stimulus plan.”
It’s not at all clear that the government invested in any similar preparatory work ahead of this G8 summit, despite it being such a difficult area. At a public meeting organised by the IF campaign last month, Treasury Minister David Gauke refused to set out the government’s position on any of the campaign’s proposals. Those favouring conspiracy theories might suggest that the failure to reach agreement could have been built into the strategy: much of the status quo is still intact, but the maximum political benefits from appearing to challenge it have been reaped.
On that crucial test of a register of beneficial ownership, for example, the UK has said it will lead by example, but the example is pretty lukewarm. It relies on Companies House, which admits it is incapable of enforcing existing transparency requirements. Meanwhile the issue of public transparency of the register is kicked into the long grass of a consultation.
Another summit this reminds me of is the last G8 hosted by the UK, at Gleneagles in 2005. The unprecedented Make Poverty History mobilisation called for Tony Blair and Gordon Brown to use the summit to push reforms in three areas: aid, debt and trade. That summit is remembered as a partial success: Bob Geldof famously gave the G8 “10 out of 10 on aid, eight out of 10 on debt,” though he seemed to forget about trade.
On that occasion, Blair and Brown got the media fillip they wanted, lauded as the “Lennon and McCartney” of global development by Bono. And while that summit undoubtedly was a watershed moment on aid, many of the promises later unravelled. In an evaluation published earlier this year, Oxfam concluded that, while “the G8’s $50 billion aid promise acted as a catalyst to significantly boost total aid levels…it is true that it’s not all been good news. The G8’s collective $50 billion promise was missed by around US$20 billion at the 2010 deadline, and European countries remain remarkably off-track for meeting their collective promise to the 0.7% GNI target by 2015.” Time will tell whether the G8 ‘principles’ from Enniskillen will meet the same fate.
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Martin Hearson is a doctoral researcher in the international relations department of the LSE. He focuses on the political economy of international taxation in developing countries. He blogs at http://martinhearson.wordpress.com.