So far from clamping down on tax avoidance, Govt is actively encouraging it
January 5th, 2013As Parliament prepares to debate corporate tax avoidance next Monday (7th), the charitable view is that government does the best it can, but is outmanoeuvred and outgunned by all those smart tycoons and multinationals who employ an army of accountants and lawyers to run rings round flat-footed regulators and tax inspectors who are always behind the curve. This is a pastiche of the truth. The reality is that government, so far from cracking down on tax dodgers, not only turns a blind eye to all but the most egregious examples of tax misfeasance, but actually promotes some of the most brazen examples of tax scamming itself. This scarcely surprising when the whole apparatus of tax policy has been captured by corporate interests. The so-called crackdown will be run by the former City corporate tax lawyer and ex-Tory special adviser, Edward Troup, who now heads up tax at the HMRC, and will be overseen by HMRC chairman Ian Barlow who ran the most aggressive tax avoidance schemes for KPMG. Even HMRC’s ‘ethics’ committee is chaired by Phil Hodkinson, director of Resolution insurance company based in a tax haven.
Both parties have been at it to assist tax dodging. New Labour removed the tax on dividends which provided Philip Green’s wife in Monaco with a £300m gift she would otherwise have had to pay on the £1.2bn dividend from his Oxford Street ratail empire. Gordon Brown as Chancellor in 2000 cut capital gains tax for private equity from 40% to just 10% which enabled them through financial engineering to transform income into capital gains and thus famously pay tax at a lower rate than their cleaning ladies – a process that turned much of the City of London into a tax haven. New Labour also exempted from tax the profits returned to the UK from overseas subsidiary companies , thus encouraging industrial-scale tax avoidance by sending income offshore.
The present Tory government has taken this further still. Osborne was lobbied in Opposition by Lord Fink, then Tory party treasurer, to provide a level playing field for UK companies with competitors in tax havens (!), and he promptly followed this through in Government with tax exemptions for companies’ tax haven branches. In 2011-12 he went even further by (staggeringly) cutting corporation tax for companies that opened a financial subsidiary in a tax haven from the current 23% to just 5%. And his latest tax wheeze is the so-called patent box, which will allow companies with a product that contains even just a small patented component to qualify for a new much lower rate of corporation (10% by 2017) on all of its profits.
With government itself deliberately opening up massive tax loopholes like this, do multinationals and the hyper-rich need to bother with tax avoidance themselves at all?
January 8th, 2013 at 10:45 pm
I believe that Mr Meacher is correct when he implies that both Parties have been complicit with regards to Corporate Tax Evasion.
Mr Meacher articulates some crucial points concerning Political Campaign Funding. it seems that a Politician who leaves office and immediately goes and works for a Bank is a glaringly obvious conflict of Interests between Public Office and Personal Gain.
Mr Meacher also understands the Banking System more than most MPs, which gives him a huge advantage over other MPs who do not, which means his presence in the House of Commons is a huge Asset for the Public.
If the Government (present or past) was serious about cutting the Deficit, they would shutdown these shadowry regimes operating in Guernsey and Jersey, City of London, Cayman Islands and others.
Very well funded Lobbyists from the City of London Corporation invest millions of pounds persuading Politicians to amend Laws and Relax Restrictions on the Financial Industry. It is due to huge Systemic Education Campaigns through the Media, Universties and State Education that people assume that the Financial Industry is a net contributor to the Economy. The truth is – as stated in a Bank of England Report, that Private Banks (even the ones who were not Bailed out) require subsidies that exceed the amounts of Tax they pay back to the Treasury. RBS and Northern Rock both had or have subsidiary Branches located in Tax Havens and the bailouts allowed these failed businesses to offload worthless Derivatives and other bad assets onto the Tax payer. To add insult to injury, they also hide their profits through a Network of Offshore Tax Havens using nominee Companies, making it difficult to find all their recorded wealth.
As Mr Meacher stated in his recent Commons speech, the Government could prevent this back door Accountancy System by shutting down the Tax Havens and demanding full transparency.
They could also prevent this by not bailing out Banks and not being held hostage to a Banking System that has the authority to create far more money that the Government Itself. The losses in seigniorage to the Government due to only 3% of the money supply being created by the Government, points to the key reason why the National Debt is so large and why the Deficit is not reducing despite what the Conservative Government is saying.
I believe that the UK was able to rebuild itself after WWII due to the fact that 20% of the total money supply was created interest free and Banks were much more heavily regulated.
Why have there been so few new Banks created in the last Hundred years? In fact, why has the number of Banks reduced creating larger monopolies in Finance? Has the Central Bank System helped or made this situation worse. It is worth noting that from 1836 to 1913, the United States did not have any Central Bank but had a growing and stable economy – despite being punctuated by a Civil War. The only reason for a Central Bank is to protect private banking interests and not protect the general public.
Scotland – prior to 1844, was another Financial System that was so stable, Nothern Counties of England preferred Scottish Bank Notes as they kept their value more than the English Pound Notes, partly because Scottish Banks were not protected by a Central Bank, and so had to maintain the value and worth of their Bank Notes.
January 8th, 2013 at 10:55 pm
A good reference book on this subject would be “Treasure Islands – tax havens and the men who stole the world”, by Nicholas Shaxson.
January 8th, 2013 at 11:10 pm
Why did our Government offload the cream of the crop of Northern Rock Assets while forcing the British Tax Payer to pay for worthless Toxic “Assets”. Surely this is Fraud on a huge scale?
Northern Rock owned various Offhore Branches and Subsidiaries enabling it – through Mortgage Backed Securities, to inflate it’s lending and pump billions into the Property Market making it more expensive to buy a Home. Despite this, the Government rushed to the rescue – like a parent to a child who has just found a loaded revolver in a draw and fired a few rounds in the Air.
Are the Banks regarded as small children by the Government, or is it the other way around?
January 16th, 2013 at 2:04 am
Why are they so far from clamping down on tax avoidance?
Because MPs like John Redwood are actively involved in it.
“John Redwood has been arguing against forcing MP’s to disclose their tax affairs, now we know why.
“Surely there is some personal space?” Redwood pleads. “Do you want their medical records?” Furthermore, he is peeved at the bad press tax avoidance has been getting of late. “Maybe,” he suggests, “the people who are saving for the future are more virtuous because they won’t be a burden on the tax-payers when they retire.” Redwood has good reason to defend tax avoidance.
In the last financial year- leaving aside expenses- he topped up his MP’s salary with £187,796. The greater part of this he earned as Chairman of the Investment Committee of Evercore Pan-Asset Capital Management Ltd; a company he helped set up in 2007.
Evercore specialises in funds ‘domiciled
in tax efficient jurisdictions like Dublin or Luxembourg’, which enable investors to avoid UK taxes. The company boasts that it ‘looks after a number of successful individuals and families’ and the minimum investment for most of their products is £50,000″