King Charles urged to address British tax havens in public letter

An open letter¹ sent to King Charles by the Tax Justice Network and published today in the Guardian warns the King ahead of his coronation of the “heavy financial and human costs” inflicted on “ordinary people in the UK, the Commonwealth, and around the world” by the British tax havens over which King Charles is sovereign.

“The financial regulations of Your Majesty’s jurisdictions,” Tax Justice Network chief executive Alex Cobham writes, “pose the biggest non-violent threat in the world to human rights.”

As countries gear up for negotiations for a new UN leadership role on global tax rules – potentially the biggest tax shake up of the modern era² – the Tax Justice Network is urging King Charles to let his voice “be heard in this global discussion that will echo throughout history”.

The UK, the Crown Dependencies and the British Overseas Territories are collectively responsible for facilitating nearly 40 per cent of the tax revenue losses that countries around the world suffer annually to profit shifting by multinational corporations and to offshore tax evasion by primarily wealthy and powerful individuals. This makes the UK and its network of satellite tax havens the world’s biggest enabler of global tax abuse.³

“Our latest estimates,” the Tax Justice Network states in letter, “put the sum of this tax loss imposed upon the world by British tax havens at over US$189 billion a year, which is more than three times the humanitarian aid budget the UN requested for this year”.

If the global tax losses caused by British tax havens, often referred to as Britain’s “second empire”, were reversed, research by the University of St. Andrews and University of Leicester estimates that 12.6 million people would gain access to basic sanitation, and 1.2 million children would be able to attend school for an extra year. These positive impacts would in turn have a knock-on impact of reducing child mortality, saving the lives of over 220,000 children under the age of five over the next decade.⁴

The UK also suffers from the lose-lose game of tax havenry, the open letter warns. “We estimate the UK itself loses at least US$52 billion in tax annually to global tax abuse, which is equivalent to losing the annual wages of over 1 million NHS nurses every year to multinational corporations and wealthy individuals underpaying tax in the UK.”⁵

The letter also takes to task Prime Minister Rishi Sunak’s “most damaging” reneging, during his time at the Treasury, on commitments to corporate tax transparency made by David Cameron’s government. As Chancellor, Sunak u-turned in 2020 on requiring multinational corporations to publish their country by country reports – a legal power the UK became the first country in the world to adopt in 2016 but has to date not exercised once. Exercising this power, which the Tax Justice Network considers to be one of the “most powerful transparency tools available to governments” can recover at least £2.5 billion in corporate tax every year that is otherwise being lost to tax havens.⁶

Calling back to the King’s comments in his first Christmas message⁷ on the “great anxiety and hardship” of those struggling to “pay their bills and keep their families fed and warm”, the Tax Justice Network writes: “It is difficult in this context of current economic hardship to understand why Your Majesty’s Treasury is leaving the option to recover £2.5 billion in tax from corporate tax abusers on the table and instead opting to require millions of hard working people to pay more tax on their incomes under the frozen income tax personal allowances.”

A copy of the open letter was also sent to the Prime Minister, who the Tax Justice Network cc’d in the letter.

“The UK is now standing in the way of the march of progress,” the Tax Justice Network writes. The UK has already expressed opposition to and attempted to thwart negotiations on moving rulemaking on global tax rules away from the OECD, a club of rich countries where rulemaking has sat for the past sixty years, and to the globally inclusive UN.⁸ The UK is expected to attempt to block negotiations from succeeding.

The package of policy reforms⁹ envisioned under a UN tax leadership role has long been championed by leading economists and campaigners as overdue root-and-branch solutions to ending rampant global tax abuse and to protecting the taxing rights of countries and their people. The package consists of policies that the OECD has either long resisted or has failed to effectively deliver over the past decade due to the oversized influence of OECD members like the US and Switzerland at the OECD, and of corporate interest lobbyists.¹⁰

The letter connects the UN negotiations to King Charles’ statements¹¹ last year to the Commonwealth in which the monarch said we “must find new ways to acknowledge our past” and expressed his desire to deepen his understanding of the enduring impacts of slavery and other aspects of colonial violence and extraction.

British tax havens like the Cayman Islands and Bermuda, the Tax Justice Network writes, were encouraged down the route of tax havenry by the UK after the 1950s and remain an “unresolved legacy” of British colonialism.¹² “These tax havens continue to disadvantage their own inhabitants as well as some of the poorest people globally – and of course the people of the UK,” the Tax Justice Network writes.

“Rather than beginning to pay reparations for the violence, enslavement and extraction of the British empire,” the letter continues, “the UK’s ‘second empire’ is continuing to add to the debts that we owe. The scale of that debt is almost certainly unpayable. At a minimum, however, the time has surely come to stop the clock running.”

Lastly, the Tax Justice Network commended the example made by the King by committing to voluntarily pay income tax, which the late Queen had also done. The Tax Justice Network invited King Charles to set a further example by encouraging his enterprises to seek the Fair Tax Mark accreditation, a British-run international accreditation scheme considered to be “the gold standard of responsible tax conduct” for businesses and organisations.¹³

Corporate tax avoidance topped the UK public’s list of concerns in 2022 for the tenth consecutive year in a poll by the Institute for Business Ethics.¹⁴ Asked what issues most need addressing in their view of company behaviour, the British public put corporate tax avoidance above bribery and corruption, and above environmental responsibility and worker exploitation. In another 2022 poll by the Fair Tax Foundation, which runs the Fair Tax Mark scheme, three quarters of respondents reported they would rather shop with, or work for, businesses that can prove that they are paying their fair share of tax.¹⁵

King Charles and the British monarchy have several times come under scrutiny in the press in the past over the monarchy’s and the then Prince’s use of tax havens and over questions of tax avoidance.¹⁶

“Bringing full financial and tax transparency to the monarchy offers a path for Your Majesty to provide a powerful impetus for good,” the Tax Justice Network writes.

-ENDS-

Read the open letter here.

Notes to editor

1. The open letter is published on the Tax Justice Network website here. Read the Guardian article on the letter here.
2. Read more about negotiations on a new UN leadership role on global tax here.
3. See the Tax Justice Network’s State of Tax Justice 2021 for more information on the UK’s role in global tax abuse.
4. The research by the University of St Andres and University of Leicester is available here. For more on the GRADE analysis used in the study and on the link between tax justice and human rights, see our report here.
5. UK tax loss figures from the Tax Justice Network’s State of Tax Justice 2021. Average UK nurse salary based on latest data (2020) submitted by the UK to the OECD on renumeration of health professionals.
6. More information available here on the UK’s reneging on public country by country reporting and the estimated tax revenues missed out on as a consequences. On a related note, Australia last month made a major breakthrough in adopting public country by country reporting, going beyond the UK’s 2016 legislation on the matter.
7. Full text of King Charles’ Christmas address available here.
8. Read more here about last year’s unprecedented but ultimately failed efforts to stop a resolution for negotiations on a UN tax leadership role from coming to the UN General Assembly.
9. For more information, read the high-level UN FACTI panel’s report here.
10. For more information on the OECD’s failure to deliver the mandate instructed to it by the G20 to reform global tax, read the Tax Justice Network’s 2022 open letter to the G20 here.
11. Full text of King Charles’ speech to the Commonwealth is available here.
12. For more information on this history, see the Michael Oswald’s documentary “The UK’s Spider Web: Britain’s second empire”.
13. More information about the Fair Tax Mark here.
14. The Institute of Business Ethic’s Attitudes of the British Public to Business Ethics 2022 poll is available here.
15. Read about the Fair Tax Foundation’s poll here.
16. See Mirror ‘Prince Charles has millions in off-shore tax havens: Royal is latest to be dragged into Paradise Papers cash scandal’ (2017); BBC ‘Paradise Papers: Queen’s private estate invested £10m in offshore funds’ (2017); BBC ‘MPs question Prince Charles estate’s tax arrangements’ (2013); ‘Prince Charles’s £700m estate accused of tax avoidance’ (2012).