President-elect Barack Obama plans to crack down on international financial centres such as Jersey, Guernsey and the Isle of Man, within weeks of taking power in January, putting him on a collision course with UK prime minister Gordon Brown, according to the UK’s Guardian newspaper.
There is growing international pressure to outlaw the secretive practices of international financial centres as a key part of reforms to the world's battered financial system, as the leaders of the world's 20 most powerful economies gather for a major conference in Washington next weekend.
Some of the world’s largest economies such as
Germany and the
US argue they are losing legitimate tax revenues because of such jurisdictions. Defenders of tax havens respond by saying that they act as incentives for countries to reduce tax burdens overall, foster growth and shelter groups fleeing oppressive and corrupt regimes.
In response to the
US calls for a crackdown, the
UK has been lukewarm, the Guardian said, but Mr Obama, whose approval will be key to any reform package over the next 12 months, was one of the signatories of the Stop Tax Haven Abuse Act, legislation put to Congress last year that blacklisted Jersey,
Guernsey and 32 other jurisdictions. Key aides to Mr Obama said he will introduce a similar law as part of a wide-ranging revenue-raising and tax-reform package, within weeks of taking power.
Obama advisors estimate the measure could raise at least $50 billion per year in lost
US tax revenues, and
Washington sources say leading accountancy firms have already hired lobbyists in anticipation of a fierce battle to water down the proposals.
Key measures are likely to include: revealing the beneficial owners of secretive trusts; prohibiting accountants from charging fees on specific tax services; and identifying "offshore secrecy jurisdictions" that “unreasonably restrict
US tax authorities from obtaining needed information”. The measures could end years of financial secrecy that have protected the super-rich and international businesses as they move money from one jurisdiction to another.
Joe Guttentag, deputy assistant secretary for international tax in the
Clinton administration and a key figure in the Obama campaign, is likely to drive the policy through, along with Professor Reuven Avi-Yonah, who helped frame the act.
The measure comes as the
UK faces international condemnation for blocking moves in the United Nations to upgrade its tax committee to intergovernmental status.
