How we should get tougher on the tax cheats

The revelations today in the Guardian, as well as in Le Monde, BBC Panorama and the US International Consortium of Investigative Journalists, are truly staggering.   It shows how a HSBC-owned private bank in Switzerland actively colluded with hyper-rich clients to enable them to avoid EU taxes, to conceal undeclared ‘black’ accounts from their domestic tax authorities, to help them withdraw bricks of cash in foreign currencies so as to launder huge sums of money from tax havens for use in their own countries without paying tax (used most notoriously by the British clothing tycoon and restaurateur Richard Caring to withdraw 5 million Swiss francs, equal to £2.25m, from his Geneva bank on one day in 2005), and to provide accounts for international criminals and corrupt businessmen.   HSBC have defended themselves by saying they have now improved their standards of due diligence, but the truth is that this massive outburst of tax fiddling, a microcosm of the global tax cheating, would still be continuing today but for the whistleblowing by an IT worker at the bank who hacked into the Swiss bank’s 30,000 accounts and fled with them to France.

There are several profoundly serious lessons to be drawn from this episode.   First, the level of regulatory accountability exercised by the banks was pathetic to non-existent.   HSBC understood all too well what was being done, but found it too profitable to put a stop to it.   They excused themselves by the patent hypocrisy that payment of tax was a matter for their individual clients, not for them, even though they themselves were the architects of all manner of artificial devices to ensure tax wasn’t paid.   In future a Labour government should make back collusion in tax avoidance a criminal offence.

Second, the mantra is perpetually used by tax dodgers caught out that they had paid all taxes due and had not broken any laws.   It is true that the tax laws need to be significantly tightened to block obvious loopholes.   At present all ordinary employees – some 99% of the population – are obliged to fill in a tax return each year detailing their earnings.   If they give false information, understate their true income, or conceal sources of their earnings, they can be prosecuted and if found guilty, heavily fined or even sent to prison.

Much more so there should be a legal requirement for wealth-holders to provide a return each year of their assets, their location (anywhere in the world), and the individual and total value of all their assets.   There should then be an annual levy on these assets in accordance with a progressive tax scale.   Failure to provide accurate and complete information of their wealth each year should lead to fines commensurate with the extent of concealed wealth and in the most serious or repeated cases a custodial sentence.   For the first time the British tax system would then take on a real element of equity between rich and poor.



7 thoughts on “How we should get tougher on the tax cheats

  1. But still the frauds going on they still finding ways to screw us isnt rocket science you lock them up has criminals has I said someone sanctioned who pinches food will get jailed but these criminals has thats whot they are suited criminals unless labours inbed with them we niw ed b brothers one of these greedie people but then how much food does one want your tables has the poor gets the crumbs if they are lucky enough butjailing em wwould be a start you see they still at it jeff3

  2. The banking industry is totally fraud. Allowing banks to create money out of thin air, is fraud.

    HSBC is a corrupt criminal bank. It was formed to launder money for the British Government, when it was selling opium to the chinese.

  3. It’s tax evasion on an industrial scale facilitated by our biggest bank.

    The response from both the bank and former Chairman Lord Green is equally staggering – he refuses to comment – not acceptable in my view – and the bank says they have changed their procedures as if that makes everything alright.

    Both need to be held to account now !

  4. What revelations?

    All this has been common knowledge for at least 4 years:

    HSBC, (whilst Steven Green; later Cameron’s minister for Trade and Investment, was their CEO,) was guilty of a “blatant failure” to implement anti-money laundering controls and wilfully flouted US sanctions, American prosecutors said, as the bank was forced to pay a record $1.9bn (£1.2bn) to settle allegations it allowed terrorists to move money around the financial system.

    The LIBOR fixing and massive tax evasion, (particularly in Greece where apparently the capital flight that HSBC helped to facilitate, contributed significantly to the collapse of Greek economy,) are also equally well documented at this point.

    But back here in the UK;

    This is a comment made recently by an old friend of mine about way that the Citizens Advice Bureau is currently being quietly and rapidly run down and phased out by exactly the same government who promised to support and fund it, to compensate for the virtual complete abolition of legal aid.

    “Ref CAB – I think each branch is an independent charity though they do stuff with their parent body and I think they’re all dealing with the current problems differently. We work in partnership with the one in Milton Keynes and the chap running it is tearing his hair out as the Council has decided at very short notice to cut 100% of the funding it gives it which may mean it closes. XXXX’s managed to negotiate a year’s breathing space but it’ll shrink in the meantime because of other cuts (he’s already had to make 13 people redundant when the changes to legal aid came in) and he’s seriously worried about what will happen to local people when the nightmare that is Universal Credit rolls into town.”

    “So pretty depressing to think about; but CAB seem to me to be being pushed in roughly the same direction that REMPLOY and St John’s Ambulance have already gone in, and will no longer to be able to deliver the quality or levels of service and support to those people who most desperately need of it.”

    Which invites the question; what under these circumstances, is the point of them, (C.A.B.) anymore?

    (Just another middle class job creation scheme?)

    “The most dangerous man to any government is the man who is able to think things out… without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, intolerable.”

    H. L. Mencken

  5. I seem to recall also, (correct me if I’m wrong,) that payment of that record $1.9 Billion fine by HSBC was made wholly conditional on Green and other senior officers of HSBC being granted complete personal immunity from any prosecution for the criminal offenses HSBC, under Green, had already committed.

    I have also heard it argued that a possible reason for Green being made a minister (so inexplicably and inappropriately,) in the first place in Cameron’s government was to give him an additional protection from the prosecution for his and for his company’s massive wrongdoing in the UK and it has also even been suggested that UK laws on money laundering, (under which he might have been prosecuted,) were also relaxed and coincidently so at about the same time as all this came to light.

  6. Quite simply if we nationalised the Banks, the whole problem would be visible and money laudering could be stopped over night.

    Secrecy in the private sector enables crime to operate without any recourse for legal action.

    The perfect recipe for those with wealth to avoid their social responsibility, New Labour are quick to ask working people face up to their social responsibilities, but over look our betters because they are rich.

  7. Mervyn Hyde-

    I would strongly dispute your use of the term, “our betters,” (speak for yourself,) in this context, but still, I take your point completely.

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