Why are we asking the British tax havens to reform themselves when the Foreign Office says we can impose new law on them?

I was rummaging through various links today and came to the UK Foreign Office White Paper on the Overseas Territories published in June 2012. This contains, on page 14, the following interesting statement in a section headed ‘Our Constitutional Relationship’.

By Richard Murphy, director of Tax Research UK

I was rummaging through various links today and came to the UK Foreign Office White Paper on the Overseas Territories published in June 2012.

This contains, on page 14, the following interesting statement in a section headed ‘Our Constitutional Relationship’:

The UK, the Overseas Territories and the Crown Dependencies form one undivided Realm, which is distinct from the other States of which Her Majesty The Queen is monarch. Each Territory has its own Constitution and its own Government and has its own local laws. As a matter of constitutional law the UK Parliament has unlimited power to legislate for the Territories.

I would add that I can see no difference in the case of the Crown Dependencies.

In that case let’s be clear; there is no reason to ask the consent of these tax havens for automatic information exchange, transparency, documents on public record or anything else. We can just legislate that they will do these things and the reason why is clear:

Governors or Commissioners are appointed by Her Majesty The Queen on the advice of Her Ministers in the UK, and in general have responsibility for external affairs, defence, internal security (including the police) and the appointment, discipline and removal of public officers. Elected governments have a wide range of responsibilities.

Tax information exchange is quite clearly an issue of external affairs: the UK’s tax havens are not responsible for it; the UK is. This White Paper makes quite clear that local officials do not have authority on the issue. In that case it is time for the UK to act, now.

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