INACTION THIS DAY

Tax evasion and tax avoidance, at least outside of the UK, is rarely out of the headlines with  many heavily indebted governments keen to hunt down every tax dollar / euro / pound that is owed by tax evaders avoiding (unlike the rest of us) paying their fair dues to society. The Westminster elite privately at least regardless of whatever they say publically, appear to pay scant respect to the idea of fair taxation and fair representation, we may be pretty close to being governed by the sons of bankers and the sons of the City.

The UK Government is in up to its neck when it comes to tax evasion, it’s heavily involved in aiding and abetting tax evasion worldwide. British Overseas territories, including the Cayman Islands, help to hide around trillions from pounds from the different nation’s tax authorities. In the belly of the beast lies the City, which may explain Cameron’s reluctance to do anything about the problem as some of the city banks are hand in glove with drug dealers, dictators, rogue states and terrorists when it comes to money laundering and may perhaps also offer comfy lucrative seats on the board to former Westminster politicians further down the line.

Back in April 2013  the International Consortium of Investigative Journalists [ICIJ] based in Washington DC, began in collaboration with international media, publishing  results into their research into tax evasion and off-shore tax havens. The journalists sifted through an electronic mountain of information - literally  millions of records leaked from Britain's offshore financial industry, exposing for the first time the identities of thousands of holders of anonymous wealth from around the world.

The leak of some 2 million emails and other documents, mostly from the British Virgin Islands (BVI), exposed the scale of the offshore tax evasion trade and the identities of tax evaders. It has been estimated that wealthy individuals involved in tax evasion and tax avoidance could potentially have as much as $ 32 trillion dollars (£ 21 trillion pounds) stashed in overseas and off-shore tax havens. The scale of this problem is staggering, if the pot were to be equally divided up then it could be parceled out as around $3000 dollars for every living person on our planet.

No while there is nothing wrong with a company being based in a tax haven does not necessarily mean that a company is avoiding tax or taking advantage of the hitherto pretty impenetrable secrecy that tends to surround tax havens, even if the tax jurisdictions are closely associated with tax evasion. That said, tax havens tend to be masked by secrecy and low taxes, and there have been few attempts to identify them. UK Revenue and Customs does not provide a list of tax havens.

The Con Dem Westminster coalition government at best can be said to have demonstrated a half-heartedly highlighted reluctance to clamp down on tax avoidance. The PM might have publically slagged off a few celebrities, for using a tax avoidance scheme in Jersey but he still appears to be acutely reluctant to deal the tax havens that happen to be UK Crown Dependent territories.  

Most reasonable people accept that there is a real need to deal on a global basis with the problem of off-shore companies and those individuals who are actively engaged in tax avoidance, tax evasion and / or money laundering. The focus on tax havens and tax avoidance is a bit embarrassing as the UK sits at the heart of the problem having consciously chosen not to regulate its own financially useful crown dependent  dependencies and territories.

The scale of the off-shore problem may take your breath away. The Cayman Islands; currently home to some 12,000 corporations has a population of 50,000, yet is home to 70% of the planets hedge funds (as of June 2012). The British Virgin Islands (population 22,000) is home to 823,502 registered companies. General Electric paid no tax in 2010, made a $14.2 billion dollar profit. Barclay's (as of June 2012) had 181 subsidiaries registered in the Cayman Islands and paid little UK tax on its worldwide profits.

The Dirty Digger's News Corp oddly enough managed to base 152 subsidiaries in tax havens across the planet (and that’s according to the US Government) and yet managed to pay no UK corporation tax between 1998 and 1999. US President Obama was 100% right to suggest that the governments of the world should jointly tackle the issue of tax evasion and tax havens. By tackling the tax havens, the tax avoidance and the questionable dealings of the derivative traders, hedge funds and the off balance sheet trading then we might go so way towards dealing with the consequences of the worldwide financial crash. Yet Mr Cameron and the other 18 millionaires in the cabinet have been stalling when it comes to closing  the tax loopholes.

The BVI has incorporated more than a million such offshore entities since it began marketing itself worldwide in the 1980s. Company owners' true identities are never revealed. Even the island's official financial regulators normally have no idea who is behind them. The British Foreign Office depends on the BVI's company licensing revenue to subsidise this residual outpost of empire, while lawyers and accountants in the City of London benefit from a lucrative trade as intermediaries, claiming that the tax-free offshore companies provide legitimate privacy.

In November 2012 a National Audit Office report revealed that of HM Revenue and Customs (HMRC) is struggling to curb aggressive tax avoidance schemes is costing the UK billions of pounds in lost tax. Much to the embarrassment of the Con Dems, tax evasion and tax evaders and the hunt for their concealed cash remains a big issue in the USA, in the UK the impression given is that the Conservative dominated Con Dem Westminster coalition government simply hopes that if we don’t talk about the problem then perhaps the problem will go away.

Across the other side of the pond, the US government’s pursuit of tax evaders led indirectly to the closure of Switzerland's oldest bank, after pleading guilty in a New York court to helping US citizens evade paying their taxes. This was the first foreign bank to plead guilty to tax evasion charges in the USA. Rather rapidly other Swiss banks have taken steps to prevent US citizens from opening offshore accounts to avoid paying tax.

Here in the UK, as part of the public sector budget cuts, the Con Dem Government has reduced the number of staff in Revenue and Customs from around 100,000 to 65,000 and intends to further reduce the numbers to around 50,000 by 2015. So much for taking tax evasion and tax avoidance seriously and ensuring that we pay our fairshare of tax. The problem lies with the so called Westminster elite and their cronies in the City rather than with the ordinary people, few of whom were directly responsible for causing the financial crash in the first place, perhaps we are not all in it together after all.