Barbados: Two weeks before the G20 summit, offshore state capture still alive and well

In his latest book the Finance Curse, Nick Shaxson shows how the financial services industry – often led by the big 4 accounting firms – captures the state in small jurisdictions with large offshore sectors.

As mentioned in yesterday’s blogpost, the government of Barbados this week presented an economic plan in which promotion of the country’s offshore sector features prominently. The summary of the plan was provided by KPMG, followed by a breakfast meeting at which the local PWC director of tax and legal services said that the “measures show promise“.

In less than two weeks, the G20 will be meeting again in St Petersburg: its priorities for 2013 include strengthening financial regulation. In the meantime, the OECD is proposing a new action plan for international taxation.

But do the G20 countries and international organizations really have enough leverage (not to mention moral authority, given that several major tax havens are in G20 countries) to impose policy changes on 70+ secrecy jurisdictions around the world?

As Jason Sharman of Griffith University says in this week’s edition of the Economist: “The idea of becoming tax haven “will always loom large” for small states with few other options for economic development”. Despite some recent advances in response to international pressure, the Barbados example shows that offshore decisions are still to a large extent driven by local politics. And that offshore local politics are still dominated by big finance.

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