An influential American Senator has urged US President Barack Obama to push the G20 nations to bar tax haven banks from participating in the global financial system if they refuse to cooperate with investigations of tax evasion.
As leaders of the world's developed and emerging economies prepare to meet in Pittsburgh next week for the banking and finance summit, Carl Levin, Chairman of the U.S. Senate Permanent Subcommittee on Investigations, has called for encouraging the G-20 countries to adopt an approach on tax havens similar to the methods currently in use in the US to target international money laundering.
Levin's subcommittee, which has been investigating offshore jurisdictions over the last 10 years, has estimated that offshore tax abuse costs the US Treasury $100 billion a year in lost revenue.
In a letter to Obama, Levin said US financial institutions could be barred from doing business with nations or financial institutions engaged in money laundering.
A provision allowing the same measures to be applied to nations or financial institutions that impede US tax enforcement is included in the Stop Tax Haven Abuse Act, which Levin introduced this year and that Congressman Lloyd Doggett has introduced in the House, a media statement said.
"If the legal mechanisms were in place, and a tax haven bank refused to cooperate with a tax investigation, the United States, acting on its own, could stop that tax haven from taking advantage of the US Financial system," Levin said.
"If other countries adopted the same legal mechanisms, our G-20 partners or a subset like the G-7 could act as a group to lock the offending bank out of the global financial system. Tax haven banks facing that type of united action would have a much harder time turning law enforcement away empty handed," he said.
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Levin will call for additional action to combat offshore tax abuse in a speech he will give today at an international conference on increasing transparency in global finance.
"We have the means to end offshore tax abuse if we have the political will to act," Levin says in remarks prepared for his keynote address to the conference, sponsored by the Task Force on Financial Integrity and Economic Development.