Demanding that the veil of secrecy that surrounds tax havens be lifted, world leaders at a London summit this week would be urged to recognize that there is no economic benefit to tax havens by more than 300 economists, including Thomas Piketty.

A spotlight on how the British government has failed to persuade its overseas territories to stop harbouring secretly stored cash is now turned on the government even though the British PM David Cameron had agreed to host the summit nearly a year ago.

With the aim of trying to persuade them to agree to a form of automatic exchange of information on beneficial ownership of companies the British officials are locked in negotiations with the crown dependencies and overseas territories.

While the automatic exchange agreement would give a wider range of countries access to information on the ownership of shell companies, so far the overseas territories have only agreed to allow UK law enforcement agencies access to a privately held register of beneficial ownership.

The idea is being resisted by many overseas territories including the Cayman Islands and their attendance at the summit is in doubt.

The Edinburgh-born 2015 Nobel prize-winner for economics, and Ha-Joon Chang, the highly regarded development economist at Cambridge University are among the impressive roll call of economists apart from Piketty, the author of the bestselling Capital in the Twenty-First Century.

Influential experts who advise policymakers, such as Jeffrey Sachs, director of Columbia University’s Earth Institute and an adviser to UN secretary general Ban Ki-moon, and Olivier Blanchard, former IMF chief economist and Nora Lustig, professor of Latin American economics at Tulane University are among the other signatories to the letter.

“The UK and the US need to take the lead right now to end these tax secrecy havens. We see from the Panama Papers these are simply conduits for massive illegality, corruption, tax evasion and many other nefarious deeds. They just need to end. If the UK and US and the European Union as a whole decided on Thursday at the UK conference that enough is enough … there could be a phenomenal change in a very short period of time,” said Sachs while speaking on BBC Radio 4’s Today programme.

But Sachs predicted that world leaders would fail to implement meaningful reform as they would give in to lobbying from the rich.

“I think these governments don’t really want to do much because their powerful backers, whether it is in the city of London, or on Wall Street, are fighting very, very hard to keep these loopholes open … This is a system that has been created over time for the convenience of very rich and powerful people. There is no more direct example of how the rich and the powerful really control the levers of finance than these tax havens,” he said.

The letter, which argues that tax evasion weakens both developed and developing economies, as well as driving inequality was signed by 47 academics from British universities in total, including Oxford and the London School of Economics.

“Territories allowing assets to be hidden in shell companies or which encourage profits to be booked by companies that do no business there are distorting the working of the global economy,” the signatories state.

(Adapted from The Guardian)

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