Osborne’s studied silence over this last week speaks volumes. If the issue were anything else but tax evasion and avoidance, he would be seeking to find an angle to turn it against Labour for all he’s worth. But on tax avoidance he’s skewered. It was on his watch that no action was taken when news first leaked out in 2010 about massive tax evasion by the British super-rich at the British HSBC bank in Geneva. Indeed the wrongdoing was deliberately kept secret in government circles for 5 years, and only surfaced when a whistleblower blew it. On his watch the same HSBC bank, the ‘highly suspect British company’ as the US authorities nicknamed it for its polluted culture, was heavily fined in 2012 in the US for money-laundering for drug cartels and pariah states, but no action was taken in the UK. Read more “Tories aren’t against tax dodging, they’re in favour of it – just don’t get caught” »
The revelations of greed and cynical immorality, with the ex-clergyman Lord Green topping the bill, keep pouring out of this HSBC Swiss bank scandal, one of the biggest of the last few decades since this is probably only the tip of the iceberg on bank wrongdoing in this no-holds-barred era of crooked capitalism. The facts are now indisputable. After the French IT specialist who hacked into the accounts of 130,000 wealthy clients, fled with the evidence and handed it over to French tax investigators in December 2008, the French then handed a reconstructed UK version of the data to HMRC in May 2010, precisely the month when power changed hands to the Tories. Green, who had been chief executive of HSBC from 2003-6 and then its chairman till 2010, was almost immediately given a peerage and then persuaded by Cameron to become a Tory trade minister. This leaves several questions to be answered.
Why did Cameron go ahead with the promotion of Green when there was abundant evidence known to the government that an orgy of wrongdoing had polluted HSBC during precisely the years when Green was at its helm? This does cast serious doubt on Cameron’s judgement and integrity. He appointed Andy Coulson to Downing Street when there was strong suspicion he had presided over widespread hacking when he was editor of the News of the World, and now we know he appointed Green as a Minister when a huge cache of information implicated him in an enormous financial scandal.
Of course Cameron is now saying that neither he nor any other Minister, including Lord Green, knew about this scandal till this week. It is extremely difficult to believe this. Information as explosive as this about Britain’s biggest bank would undoubtedly be passed by HMRC to its Minister, Osborne, and given the gravity of the charges copied on to the Prime Minister. It is equally difficult to believe that Green was not fully conversant with the scandal when he himself was at the helm of HSBC when the bank tried to use the French courts to prevent the transfer of data revealing alleged tax evasion by its wealthy clients to HMRC. It is just not credible that Green as the chief executive of the bank would not know about such a legal intervention with such high stakes as well as the reasons behind it.
The last thread in this Establishment cover-up and closing of ranks between Downing Street and the banks is that HMRC received the information about the massive tax avoidance activities at the HSBC Swiss private bank on condition that it could only use it for tackling tax evasion, and it could not pass it to the law enforcement authorities. This is preposterous. What conceivable motive could the French tax collection agency have for imposing such a perverse restriction?
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.
Osborne unveils the classic Tory way to collect unpaid taxes and fines. Ignore HMRC and DWP which are there precisely for this purpose, but suffer from a fatal disadvantage – they’re in the public sector. So strike a deal instead with a private US-owned company – creating a joint venture with TDX Group, a so-called ‘recovery management’ company whose parent company, Equifax, is based in the US. TDX will have a 75% stake in the new entity, Integrated Debt Services Ltd, with the government holding the other 25%. TDX will get a percentage of any unpaid debts collected beyond the level collected in the last year, though the Cabinet Office won’t reveal what the percentage commission is on grounds of commercial confidentiality, as though this wasn’t a service for the public sector! Read more “Osborne targets small man to collect debts, ignores fat cat tax avoiders” »
One of the most remarkable facts about the British public’s attitude to prolonged austerity is the lack of the kind of open revolt which has been seen in so many other countries. In Greece it has led to the dramatic rise of Syriza under the dynamic leadership of the radical Tsipras who now has a poll rating ahead of all the other parties, including the government. In Spain the resistance led by originally the indignados has crystallised into a new party named Podemos which was formed only 10 months ago, but now is equally challenging the government. In Italy the prime minister Renzi has achieved the highest rating for his Democratic Party (39%), but second is the party of the comedian Beppe Grillo in the mid-20s%, well ahead of Berlusconi’s Forza Italian on 15%. So where is the equivalent in the UK? UKIP hardly counts as a serious alternative to government, though both the SNP in Scotland and the Greens in England could be seen as in the initial stages of a challenge to the main parties, significantly both from the Left like Die Linke in Germany. The dramatic rise of almost all these movements have been sparked by deep public resistance to austerity. So why not in the UK? It may be about to happen. Read more “Why haven’t there been riots about endless austerity? That may be about to happen” »
The latest OECD draft rules to regulate massive corporate tax avoidance are a real advance so long as the 44 countries concerned (90% of the world’s economy) stick to their resolve, push these measures through and resist the enormous lobbying that they can expect from a determined corporate push-back. But the past record on that is not good, and in particular Osborne is already threatening to break ranks in a manner totally discordant with all the other participants. The new regulations should at last stop companies exploiting differences between tax regimes to achieve artificial tax avoidance on an industrial scale via what are called hybrid mismatch structures. Other draft rules will require multinationals to give tax authorities a country-by-country detailed breakdown of their activities and earnings, so that they will no longer be able to carry out their operations in high-tax countries but then artificially register their profits for tax in low or virtually no tax countries. Read more “The new G20 tax avoidance rules need to be aimed at the banks & super-rich as well as corporations” »
It is worth remembering that the most popular item in Francois Hollande’s manifesto which propelled him to the French presidency was imposing a high rate of tax on the very richest in the country. Admittedly his popularity has nose-dived since then, but that is for totally different reasons to do with France’s economic straitjacket within the Eurozone. Taxing the small category of excessively rich people still remains popular in France, as it is in the UK. A recent YouGov poll found that 74% in the UK favoured it, with only 10% against, and actually the the rich were slightly more in favour than the poorest groups. Vince Cable on behalf of the LibDems has been pushing the idea of a mansion tax on properties worth more than £2 millions, but Labour has yet to indicate its support either for that or, preferably, a wider tax on the generality of wealth. Read more “Labour should champion a wealth tax which would be extremely popular” »
The latest evidence of massive tax avoidance going on right under our noses – uninvestigated, undetected, unaddressed – is truly staggering. An FT analysis of Land Registry data has found that that at least £122bn of property in England and Wales, a sum equal to no less than 8% of Britain’s entire GDP, is held through companies in offshore tax havens. This colossal level of wealth avoiding and evading tax is actually great than the total value of all housing stock in Westminster and the City of London. It immediately raises some profound and disturbing questions. Why has it been left to the FT to uncover this monstrous sidestepping of the UK tax laws rather than the government which likes to promulgate the idea that it’s cracking down hard on tax cheats? Why has the government been so slow and so ineffective in blocking this gigantic loophole which it could easily do if it were really minded to do so? Does it not indicate that London has now become tax haven-on-the-Thames, a magnet for the secreting away of dirty money from all over the world, most notably for Russian oligarchs, but also for corrupt tyrants like Abacha, Marcos and the Gadaffis? And if this enormous scandal were seriously tackled, would it not remove the need for any further austerity? Read more “London: tax haven-on-the-Thames” »
The Guardian revelations about the receipt of donations and tax arrangements of Andrea Leadson, Osborne’s junior Treasury minister, raise again the murky influence of Tory money on British politics via such devices as family trusts, non-dom arrangements, offshore mortgages, and employee benefit trusts. But that does not reveal the real scandal, namely that so far from cracking down hard on tax avoidance in all its multi-headed forms as Osborne likes to boast, he has actually allowed a multitude of avoidance mechanisms to persist untouched and has even made the UK itself into a tax haven. Despite all the sanctimonious condemnation of tax avoidance, Osborne has been regularly adding aggressive tax breaks to the UK tax code. Read more “So far from blocking tax avoidance, the Tories have made the UK into a tax haven” »