G8 leaders gather
The omens for dramatic advances for David Cameron at the Group of Eight (G8), are not propitious. The British Prime Minister, hosting the summit in Lough Erne over the next two days, had hoped that the leaders would unite around an initiative to crack down on global tax evasion and would collectively push Russia to help find a political solution to the Syria conflict. There had also been expectations that the meeting would see the formal launch of much vaunted EU-US trade talks.
Mr Cameron’s course is pitted with bunkers. On the trade front, he has the prospect of getting talks underway as agreement was reached on Friday night on the EU side but it entailed giving in to French demands on its “cultural exception”, the right to maintain quotas on cultural products against the onslaught of Hollywood. The US has threatened to introduce its own no-go areas if the EU succumbs to French demands. Concessions by the EU Commission to dilute its own sole negotiating competence should, however, reassure the French.
Canada’s prime minister, Stephen Harper, is also opposing – on the grounds of tax confidentiality – plans to crack down on aggressive tax avoidance and evasion by requiring the disclosure of the ultimate owners of shell companies. And Mr Cameron has seen his own domestic position on the issue undermined by indications from some of the UK’s dependencies that they do not want to sign up to new global rules.
Global tax evasion could be costing more than €2.5 trillion a year according to researchers from Tax Justice Network while as much as €26 trillion – twice the size of US GDP – could be hidden by individuals in tax havens. Campaigners also hope that new transparency rules on mineral extraction profits in the developing world will strengthen local governments against the multinationals.
The issue is one that strongly unites Mr Cameron, and Presidents Obama and Hollande – all have seen tax avoidance emerging as major domestic issues on the back of reports on the activities of multinationals like Google. President Putin has also said that he intends to make tax avoidance and transparency a central theme of Russia’s G8 presidency next year.
Taoiseach Enda Kenny, attending on the part of the EU presidency, may well hope, like Mr Harper, that the discussion does not go too well, and particularly that our contested “tax shelter” status doesn’t feature too prominently – this country is a beneficiary of the sort of residency rules, company reporting, patent licensing and transfer pricing practices that a proposed Organisation for Economic Co-operation and Development code is targeting.
As for Syria, the US announcement that it is willing to supply arms to rebels and may enforce a no-fly zone was certain to make bilateral talks yesterday with Mr Putin about his support for President Assad more difficult.