 |
| 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.
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.
