A PRIVATE MATTER?

Tax evasion...Here..I am shocked!

The latest tax evasion scandal to break from Panama should not really shock us.  The leaked files show how Mossack Fonseca clients were able to launder money, dodge sanctions and avoid tax. In one case, the company offered an American millionaire fake ownership records to hide money from the authorities. This is in direct breach of international regulations designed to stop money laundering and tax evasion. This is, so far, the biggest leak in history; it makes the data released by the Wikileaks organisation in 2010 pale into insignificance. Yet it reveals nothing new… save an abject failure of Westminster to do anything to deal with the problem of tax evasion.

Back in January 2016 it was the news that Google had done a deal with the Conservative Westminster government over it’s unpaid UK tax bill, something that might have been considered to be a step in the right direction.  Save for the fact that Google was no chain of high-street shops or a supermarket, but a global tech superpower with an annual turnover of close to £40bn with £4bn accrued in the UK. Compared to ordinary tax payers, they’ve got off lightly. Vast numbers of decent and conscientious tax payers and small businesses struggling with a mass of red tape will be understandably aggrieved at the Chancellor’s cosy deal with Google.

These commercial giants absolutely excel at avoiding tax; tax which should have been paid over many years. At best the donation of some  £130m in taxes from Google over the last ten years is merely a tokenistic gesture from a Government more concerned with luring multinationals than clamping down on tax avoidance. When multi-national companies avoid paying their fair share of tax, it simply means we end up with a bigger national deficit, a larger burden on hard working people who do pay their taxes and that we end up with less money to spend on our essentials, such as the NHS, schools and rubbish collections.

At a time when families are struggling with the cost of living, and local services are under pressure from government cuts, it is outrageous that multi-national companies and rich individuals are merely getting a slap on the wrist for not paying their taxes. This is nothing new, it’s been going on for years, the point scoring on the back of Osborne’s deal with Google simply means, that probably much to the quiet irritation of David Cameron, that tax evasion is back in the news.  

It may be a matter of semantics and legality when it comes to the differences between tax evasion from tax avoidance, one is a criminal act and one is permitted under the law.  It is a matter of public record that the current PM is against aggressive tax avoidance schemes. He has also been pretty forthright in stating that tax evasion is illegal, and that people can be prosecuted for that, and people can go to prison – so his relative silence and inaction on tax avoidance may be telling

It is also a matter of public record that the former Con Dem and current Conservative government’s are pursuing ideologically driven public sector spending cuts which have seriously cut staffing levels in HM revenue and Customs. The PM interestingly enough was firm enough when it came to rejecting calls for particular individuals to be stripped of public honours for wrong doing. From the perspective of the Westminster elite, if you started stripping individuals of titles and honours for wrong doings, who knows where it might end - even the possibility of former Conservative and former Labour and Lib Dem party donors ending up embarrassed.

Previously Westminster governments have been a little half-hearted when it comes to clamping down on tax avoidance or fiscal consolidation. The PM slagged off celebrities, for using a tax avoidance scheme in Jersey, a couple of years ago. Yet he remains very reluctant to deal the tax havens that just happen to be UK Crown Dependent territories.  Successive Labour and Tory governments have also turned a blind eye to this problem allowing the UK's tax gap to grow to an eye-watering £34 billion each year. 

Total fiscal consolidation over the course of the Parliamentary term (2010 – 2015) amounted to some £120 billion pounds, which may indicate the scale of the scandal. The last Labour UK Government (in 2005) merged Inland Revenue and Customs and Excise and then proceeded to cut a nearly a third of jobs in five years (99,000 to 68,000).   The party formerly known as New Labour also slashed the budget for tackling the tax gap by nearly 50% (£3.6bn to £1.9bn) between 2006-10.

Back in February 2015, it was a scandal that involved HSBC's Swiss accounts that made the news, the numbers were quite something:

·                106,000 clients with Swiss bank accounts

·                203 countries involved

·                $118bn total assets held in Swiss accounts

·                11,235 clients from Switzerland held $31.2 billion Dollars

·                9,187 clients from France held $12.5 billion Dollars

·                7,000 clients from UK held $21.7 billion Dollars

Source: ICIJ/Panorama

Now 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. It’s all a little embarrassing as the problem is that the UK is at the heart of the problem and has chosen not to regulate its own crown dependencies let alone the periodically iffy, if not periodic criminal or questionable financial goings on in the City. 

The scale of the on-going off-shore tax avoidance problem may leave you breathless. The Cayman Islands were home to some 12,000 corporations yet have a resident population of 50,000. They were home to around 70% of the planets hedge funds (as of June 2012). The British Virgin Islands with a population of some 22,000 people just happens to be home to some 823,502 registered companies.

General Electric who paid no tax in 2010, made a $14.2 billion dollar profit. Barclay's had 181 subsidiaries (as of June 2012) registered in the Cayman Islands and paid little UK tax on its worldwide profits. News Corp managed to base 152 subsidiaries in tax havens across the planet (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 that nice Mr Cameron and the other 18 millionaires in the cabinet (in 2015) pretty much stalled when it came to closing tax loopholes.

The scandal of HSBC’s Swiss accounts was but the tip of a large iceberg. The British Virgin island (BVI) incorporated over one million such offshore entities since it began marketing itself worldwide in the 1980s (with the convenient connivance of HM Government). 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 noted that HM Revenue and Customs (HMRC) was struggling to curb aggressive tax avoidance schemes that were costing the UK billions of pounds in lost tax. No doubt much to the embarrassment of the then Con Dem Coalition Westminster Government, and the now Conservative Westminster Government , tax evasion and tax evaders and the hunt for their concealed cash remains a big issue in the USA.

In the UK the impression is that the Conservative Westminster government (and perhaps the Party formerly known as New Labour (less it’s current leader) sincerely hope that the issue of unpaid tax, will quietly go away. The US government remains actively committed to the pursuit of tax evaders, both foreign and domestic, yet relatively recently in the UK, the then Con Dem Government quietly reduced the number of staff in Revenue and Customs from around 100,000 to 65,000 and hoped to further reduce the numbers to around 50,000 by 2015.

The UK Government is quite honestly up to its neck in it 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. Deep 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 perhaps offers comfy lucrative seats on the board to former Westminster politicians.

Plaid Cymru will not compromise on its commitment to tackling tax evasion. Tax evasion, tax avoidance or fiscal consolidation has resulted in vast sums of money being squirrelled away. Plaid believes that taxes should be collected properly and invested in vital public services such as health and education. The Westminster based parties, perhaps seeking future post Westminster employment, may wish to appease the City bankers and their wealthy backers, but Plaid Cymru believes in putting Welsh communities first.

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.