Ireland steadily climbs financial secrecy rankings

Cantillon: Big Four break-up unlikely anytime soon

The collapse of outsourcing giant Carillion has  sparked calls in Britain  for the Big Four to be broken up. Photograph: Darren Staples/Reuters

The collapse of outsourcing giant Carillion has sparked calls in Britain for the Big Four to be broken up. Photograph: Darren Staples/Reuters

 

“Shining light into dark places” is the motto that an organisation called the Tax Justice Network (TJN) gives to its financial secrecy index.

It ranks jurisdictions worldwide according to their levels of secrecy and the scale of their offshore financial activities. The shadiest countries are at the top of this chart and the more transparent, well-behaved ones are further down the list.

TJN, a group dedicated to highlighting the harmful impact of tax evasion, tax avoidance and offshore tax havens, has never been much of a fan of Ireland’s more creative tax policies, so it is a minor surprise that the State has only managed 26th place in the latest edition of the biennial index.

It has, admittedly, been steadily climbing it, gaining 11 places on its 2015 ranking and rising from 47th place in 2013.

Ireland, for the record, is sandwiched between France (25th) and Kenya (27th) and comes in well below Switzerland (first place, naturally) and European Union friends Luxembourg (sixth), Germany (seventh), the Netherlands (14th), the UK (23rd) and Cyprus (24th).

Panama Papers

There is no “magic bullet” that will untangle the international web of financial secrecy, TJN says. As the revelations in offshore leaks, such as the 2016 Panama Papers and last year’s Paradise Papers, have shown, offshore tax avoidance is systemic in nature.

One eye-catching recommendation TJN does make is for the scandal-tarnished Big Four accountancy firms – PwC, KPMG, Deloitte and EY – to be broken up.

The audit function of these firms would be “a good place to start”, TJN says, going on to argue that, just like the banks during the financial crisis, the Big Four have become too big to regulate.

The collapse of UK outsourcing giant Carillion has separately sparked calls in Britain this week for the Big Four to be broken up.

So how many scandals need to happen before legislation becomes a reality and not merely a recommendation? Our guess is several more.