As long as the problems of the poor are not radically resolved by rejecting the absolute autonomy of markets and financial speculation and by attacking the structural causes of inequality, no solution will be found for the world’s problems or, for that matter, to any problems.
Now there’s a man with the intention to change things.
This is from my Twitter time line:
It looks like the Overseas Territories and Bermuda and Anguilla in particular do not like being described as tax havens.
I have an easy response in that case: give up being tax havens in that case because indisputably they are right now. See the Financial Secrecy Index for more details.
A Press release from ActionAid, Christian Aid, Oxfam and War on Want:
Britain’s Overseas Territories, such as the British Virgin Islands, Bermuda and the Caymans, should use a joint ministerial summit, starting in London today, as a golden opportunity to commit to exposing the true owners of more than half a million shell companies set up on their shores, some of which are providing cover for tax dodgers trying to disguise their profits, as well as money launderers and even people financing terrorism.
The UK Government has shown leadership by agreeing to set up a public list of exactly who owns companies to avoid this happening in Britain. Campaigners from ActionAid, Christian Aid, Oxfam and War on Want are calling on the Overseas Territories to use their meeting this week to sign up to do the same, which, along with other concrete actions, would help them to shake off their shameful tax haven status.
Despite moves that show willing and claims from David Cameron that they no longer deserve to be called ‘tax havens’, campaigners are warning that the Overseas Territories continue to offer extreme secrecy to an alarming number of companies and wealthy individuals.
“The islands and David Cameron have claimed that they have cleaned up their acts and no longer deserve the “tax haven” label but unfortunately, that is not yet true. They are still clearly tax havens,” said Murray Worthy from War on Want.
Action Aid’s Chris Jordan said: “Tax havens are places that offer extreme secrecy and low tax rates – and the UK’s Overseas Territories still do both.”
Barry Johnston, from Christian Aid said: “Following widespread public pressure and high profile campaigns asking the UK Government to clamp down on the scourge of tax evasion and avoidance, we appreciate its very welcome decision to create a public register of who really owns millions of companies in the UK. We are also pleased that David Cameron is encouraging other European governments to follow suit.
“Now the Government should follow the logic of those moves and lead the way in promoting such public registers as a standard for other countries. The Overseas Territories, whose governments are currently looking at this issue, have the opportunity to lead from the front on this new standard. But ultimately, the responsibility for the global impacts of these islands lies with the UK Government.”
Leaders at the G8 Summit in June made commitments towards a fairer and more transparent global tax system, including all the Overseas Territories promising to sign up to the international system through which governments exchange tax information – the OECD Multilateral Convention. This would allow poor country governments to have access to more information on who owns what and help them assess how much tax they are rightfully owed.
“We acknowledge the progress made on G8 commitments, including the move by the Overseas Territories to join the Multilateral Convention. We want to see them put this into practice as a matter of urgency, because doing so will help other countries, including the poorest, to catch up with tax evaders,” said Oxfam’s Claire Godfrey.
Campaigners have also highlighted a range of other measures that these jurisdictions would need to take before they believe they could no longer be called tax havens. These include extending the automatic tax information sharing agreements already reached with the UK to other countries, undertaking an analysis of their negative impacts on the tax regimes of developing countries and increased transparency on financial flows and access to company accounts.
Oxfam’s Claire Godfrey said: “The meeting this week is a golden opportunity for Britain’s Overseas Territories to take a big step towards shaking off the shameful status of being ‘tax havens’ once and for all. Only when all tax havens have agreed to build a fair and transparent global tax system will the world’s poorest countries be able to reap the taxes they’re due.”
For more information please contact:
Rachel Baird at Christian Aid, on 0207 523 2446, 07969 314 117, RBaird@christian-aid.org
Or Sarah Dransfield at Oxfam on 01965 472269, email@example.com
Notes to editors:
· Using the 2013 Financial Secrecy Index database, Christian Aid calculated that at least 600,000 shell companies have been set up in the Overseas Territories. However, this may be a conservative estimate since the OECD Secretary General says 800,000 shell companies in the British Virgin Islands alone.
· News that the Convention on tax information sharing had been extended to the Overseas Territories and also the Isle of Man (a UK Crown Dependency) came on Thursday 21st November, when the OECDannounced the latest list of signatories to the Convention.
Yesterday we got the news that an interest cap will be applied to payday loans. It was welcome. One of the pressure points that swung policy was the intervention of the Archbishop of Canterbury who said his church would compete Wonga out of business.
Now the FT says this morning in an email:
There he is again.
It’s obvious banking has failed. RBS, the Co-op, Wonga; the list in the last week or so is clear evidence. But it takes the Lords and Bishops to create the pressure for change.
Is that how bankrupt government has got in this country?
I tweeted this rather poor image photo I took on the House of Commons last night:
Forgive the quality: it’s the content that matters. It seemed to say a lot, not least about a government that has done nothing to effectively regulate banks; an act of neglect for which we are all paying.
Ten years ago I wrote a report for Church Action on Poverty on the need for an interest rate cap on loans made by doorstep lenders in the UK. It was one of the very first such demands. It pioneered disclosure of abusive interest rates – which no one had realised were as high as they were until that point.
This morning George Osborne has confirmed such a cap will happen.
I have had no recent significant involvement in this campaign: credit goes to others, of course. But it's good to see another campaign begin to reach fruition.
The sad fact is there are still many more to go. I won't be hanging up my keyboard any time soon.
All politicians are to blame for the Co-op’s failings because they’re the failing of banking as a whole
The argument about who is to blame for the C0o-op’s failings continues. With reason Labour and Conservatives blame each other for what has happened. Overall, it seems both can take blame, and let’s not leave the Lib Dems out: they are in government right now.
But what this says is that politicians as a whole have not yet addressed any of the issues of substance in banking that need reform. All still quake in fear of the banking sector, the City of London and the business lobby. And even the timid reforms Osborne has proposed have no effect until 2018. It’s as if 2008 never happened. Apparently it is still business as usual, corruption, incompetence and plain abuse of society at large included.
For that this government is responsible.
But so was the last.
And so is Labour in opposition for not making clear enough why they would be different, because there is little material evidence that they would be, hair splitting apart.
That’s the problem we have. It is as if the world is paralysed into inaction because the monolith created between 1980 and 2008 is so fragile that the slightest touch will push it all over. Maybe that’s true. But that’s even more reason why courageous action is needed. I am waiting to see who will deliver it though.
I spent about 20 years of my career as a practicing chartered accountant, in he process advising many mainly small and medium sized businesses. Most felt they had two obstacles to achieving their goals (even if that belief ignored the fact that they themselves were usually the biggest problem in that process). The first was, largely unfairly, HM Revenue & Customs. The second, almost invariably justifiably, was their bank, and of the two the banks almost always came out top.
There was very good reason for that. Bank staff, who had joined them for the safest possible, lowest risk, highest pensioned career they could find in the hope of achieving the ultimate in security, sat and pretended they understood what it was like to run a small business. They hadn’t a clue. Nor had they the slightest comprehension of the mind set that a person running a business needed to possess. And yet these bankers held the power to say yes or no. It’s a recipe for disaster.
Give those bankers the wrong incentives and it will go wrong, as we have seen , all too often. There is a further claim about this today, with the FT noting:
Royal Bank of Scotland will on Monday face withering new claims over the way it treats business customers, including allegations that viable companies are being forced into default so the bank can seize their properties at knockdown rates.
More than once I saved companies facing such a fate – and when I say saved I mean just that. That RBS does it is no surprise; it’s gone on for a long time. That’s it’s more commonplace now is also no surprise: attacking the more vulnerable customer as a means to quick profit is very tempting for any bank in need of easy money.
This is the scandal of banking, and not Paul Flowers.
The problem of the Flowers debacle is that there will be calls for banking to be left to bankers. And that really would be a disaster, because they have no comprehension of the real world. In the meantime we suffer for incompetence on all sides.
The question is, when will we realise that smaller, more accountable, local banks with a commitment to long term relationships are the answer? We seem a long way from that as yet.
In the November 2013 Taxcast from the Tax Justice Network: the movers and the shakers in the 2013 Financial Secrecy Index, the pariah states trying to wreck new global transparency measures, and it’s 50 years ago this month that US President John F Kennedy was assassinated. Did you know that he was trying to tackle tax havens too?
Produced by @Naomi_Fowler for the Tax Justice Network
The battle to tax multinational corporations does, in my opinion, revolve around just four variables. They are the tax base, i.e. what should be taxed. Then there’s the tax rate. After that the issue is place; i.e. where should profit be taxed. Finally there’s the question of time, which is when profits should be taxed.
Trust me, it’s taken years to summarise all I’ve written about on this issue to just these four words:
It’s taken longer still to realise why we have so many problems isn making a tax charge on a multinational corporation stick. Fundamentally that problem is that any state can at best, if it is in open competition with other states, have effective control of only two of these variables at any time.
So, a tax haven can fix its base (nothing) in its place (at least as far as the recording process goes) by abandoning rate and time.
The US can argue for rate (high) and place (US) only by abandoning base (to loopholes) and time (to offshore deferral).
The UK tried to do base (worldwide) and rate (28% to 2010) but lost place (when the controlled foreign company rules failed) and time (by effective deferral that those rules allowed).
You may begin to get my drift, but there is a key assumption in here and that is that states compete. What if they didn’t? What if they said that if a tax burden is to be imposed on capital – as has to be the case in the pursuit of equity and balanced budgets then they should stop pretending that they should comply with the micro economic theory of the firm and should instead behave as what they are: governments who have a duty not to fail and an obligation to their own taxpayers and a resulting commitment to each other government to ensure that tax is paid wherever it is due.
Then the story changes. Now we still have four variables but we have to decide which are to be controlled cooperatively and on which variance may be allowed.
We can’t solve four variable equations. It is not possible. But we can solve two variable ones. So suppose cooperation controls two variables only leaving the others open to local control. Doesn’t that make sense?
If so then what variables do we need to control mutually? To me there seem to be two obvious ones: they are place and time.
Let me deal with the last first: deferral makes no tax sense to any state. It never has and never will. Profits earned now need to be taxed now. Current taxation has to be the norm. In that case the deferral of tax that comes from relocation has to be eliminated. This means that place has to be the connected, but different, variable that has also to be controlled internationally to ensure states can have sovereignty over base and rate.
This means firstly that the allocation of profit to a place has to be reasonable. Unitary taxation provides a mechanism for doing that. This deals with the problem of place. Secondly it has to be complete: country-by-country reporting deals with that by ensuring all profit is captured with the potential for re-allocation wherever it has been attributed to by a multinational corporation. This by default deals with timing: all current profit is apportioned to the place where it is really most likely to have been earned.
But this does not undermine sovereignty. Tax rate still very clearly then remains a variable under local control. And, in arguments I will be making over time, I think this is not the end of the story on base either. It is profit that is allocated. Whether to tax all, part of none of it should then be a decision for the state to make.
There is not time to expound on this last idea this morning: I am at a seminar today and this blog is a mere rehearsal for what I might (I stress, might) be saying. That issue on base is unlikely to come up in detail. It is still a research work in progress.
But if we remember there are four variables in tax and we can only control two individually we have a basis for international cooperation that is more realistic than demanding control of all four, or different ones on different occasions.
We have a long way to go in beating international companies on tax. Getting the intellectual framework right would be a useful start though.
As the Tax Justice Network has reported this afternoon, Luxembourg has failed its second stage OECD Global Forum review because of serious and systemic regulatory failures. BVI, the Seychelles and Cyprus have also failed. Switzerland has failed to make it far enough through the process to fail, as yet.
As TJN also says, this is despite the appallingly low standards expected by the OECD that lets so many tax havens completely off the hook.
But let’s put this in context: Luxembourg is the main entry point for multinational company foreign direct investment in Europe and it has failed regulatory standards. Is that coincidence or the reason why MNCs favour it so strongly.
I know what I think.
And guess who dominates the tax abuse market in Luxembourg? Why, the Big 4 accountants, of course.
Again, I see no coincidence.
It’s time for the EU to act on this one. If the ‘common market’ is to mean anything rooting out abuse has to be a part of its role. Start with Luxembourg.
- Grand Chamber Judgment Söderman v. Sweden - covert filming of minor girl
- Arrêt de Grande Chambre Söderman c. Suède - prise d’images secrète d'une jeune fille
- Judgment Benzer and Others v. Turkey - military responsible for bombing civilians in 1994
- Arrêt Benzer et autres c. Turquie - l'armée responsable d'un bombardement de civils en 1994
- Judgments concerning Bulgaria, Lithuania, Spain, and Turkey 12.11.13