UK should clamp down on unjustifiable tax havens say economists ahead of anti-corruption summit

The logo of Panama law firm Mossack Fonseca is seen at the entrance of its Hong Kong office Getty Images

UK Prime Minister David Cameron has been urged to clamp down on tax havens that fall under British sovereignty. In a letter to world leaders, 300 economists said that there is no justification for tax havens and that action should be taken against them.

In the letter sent ahead of an anti-corruption summit hosted by Cameron in London on 12 May, the economists said that the UK is uniquely placed to reduce corruption as it has sovereignty over a third of the world's tax havens. The economists are urging the government to lift the veil of secrecy over the ownership of companies and trusts.

The letter, coordinated by Oxfam, includes Thomas Piketty, the equality expert, Angus Deaton, the 2015 Nobel laureate for economics and Ha-Joon Chang, a Cambridge economist. They also include 47 professors from British universities, including Oxford and the London School of Economics.

The letter urges governments around the world to lift the veil of secrecy surrounding tax havens and to make publicly available information about the real beneficial owners of companies and trusts.

They urged the summit to "make significant moves towards ending the era of tax havens," The Times reports. "Whilst these jurisdictions undoubtedly benefit some rich individuals and multinational corporations, this benefit is at the expense of others, and they therefore serve to increase inequality," the letter adds.

According to the newspaper, the letter had been "watered down" compared to draft versions which demanded the registers of the true owners of offshore companies be made public. Instead, it is now asking for a commitment that law enforcement agencies and others can access the information.

Jeffrey Sachs, an adviser to UN Secretary-General Ban Ki Moon, and the director of Columbia University's Earth Institute said: "These havens are the deliberate choice of major governments, especially the United Kingdom and the United States, in partnership with major financial, accounting and legal institutions that move the money."

Offshore funds took centre stage after a leak from a Panamanian firm Mossack Fonseca revealed the use of tax havens by wealthy individuals and firms of anonymous companies.