Protesters demonstrate against corporate tax evasion | Andy Rain/EPA Opinion Britain as a tax haven? It already is Brexit will give Brussels more power to address the threat from tax secrecy.

LONDON — As Britain readies itself to trigger Article 50, it appears to have given up on seeking EU allies for the negotiations to come, threatening instead to turn itself into a full-blown tax haven. This is a worrying sign of the number of paddles with which Prime Minister Theresa May has equipped herself for the planned expedition up Brexit creek.

As many of those sitting across the table from the British prime minister know, turning the U.K. into a tax haven will cause more damage inside the country than it will across the Channel. Indeed, if the May government carries out its threat to be a bad neighbor, it is the remaining 27 EU countries that stand to benefit.

Tax havens share three broad characteristics: financial secrecy, which allows companies to hide their income and assets from those who might wish to tax them; loose tax rules and low tax rates, which provide incentives for companies to shift profits to the haven; and loose financial regulations, which provide mechanisms facilitating the laundering of funds.

By these measures, the U.K. is already well on its way to becoming a tax haven. Britain has long off-shored its secrecy to the Crown Dependencies and Overseas Territories, places like the Cayman Islands, Jersey and the Isle of Man, rinsing the funds of traces of their origins before they flow to the City of London. If this network of secrecy is considered as a single entity, it sits at the top of the Tax Justice Network’s financial secrecy index as the biggest threat to global financial transparency.

State aid investigations spearheaded by the EU also challenge corporate tax abuses, as in the case of corporate giants such as Apple, Starbucks and Fiat.

Similarly, when it comes to corporate taxes, successive U.K. governments have led the race to the bottom — seeking to turn the country into the most "tax competitive" major economy. This impetus has survived both government-funded and independent analyses demonstrating that the U.K. Treasury is a net loser from such policies.

Finally, the U.K. has long offered a deliberately soft touch on financial regulation. American authorities, for example, were dismayed, if not altogether surprised, to find that it was the London operations of a number of U.S. financial institutions that blew up during the financial crisis.

The European Union, by contrast, has led the way in the fight against tax havens. The EU's savings directive set the global standard on automatic processes for exchanging banking information and took important steps in establishing public registers of the beneficial ownership of companies in its new anti-money laundering directive. State aid investigations spearheaded by the EU also challenge corporate tax abuses, as in the case of corporate giants such as Apple, Starbucks and Fiat.

The British government is correct to note that Brexit will provide the U.K. with greater liberty in its pursuit of becoming a tax haven. What it seems to have failed to take into account is that leaving the EU will also provide Brussels with more power in addressing that threat.

For example, British financial services companies will need so-called "passporting rights" if they are to operate on the Continent. The EU could make these conditional not only on meeting the bloc's regulatory standards, but also on maintaining pace with its financial transparency rules. And with the U.K. absent in the legislation process, it is likely that these regulations will become more severe.

Similarly, the EU’s use of objectively verifiable criteria in blacklisting tax havens is likely to prove a potent antidote to British secrecy laws. And any pain the bloc would suffer from putting British financial services off limits would likely be small, when one takes into account the quick relocation of the financial sector's jobs and taxable income from the U.K. to the Continent.

A tax and regulatory race to the bottom would undercut public services, exacerbate inequality and depress long-term growth.

In the area of corporate profit-shifting, aggressive attempts by the Treasury to encourage corporations to shift their profits to the U.K. could provide the trigger for the EU to finally push through its Common Consolidated Corporate Tax Base, a policy it has attempted to get off the ground for years, often in the face of opposition from the U.K.

This policy would ensure that the EU’s share of multinational enterprises’ taxable profits corresponds with the real economic activity taking place within the bloc. It would seriously hinder the U.K.'s attempts to slash corporate taxes to attract European business by removing EU corporations' ability to move their income elsewhere.

If the U.K. carries out its threat to become a tax haven, it will condemn itself to major economic costs — and to significant political damage. A tax and regulatory race to the bottom would undercut public services, exacerbate inequality and depress long-term growth.

The threat may be empty when it comes to the EU, but it remains very real when it comes to British citizens.

Alex Cobham is director of Tax Justice Network in London.