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.

THE PRICE OF THAT RETIREMENT JOB...

It is a sad fact that the fate of our manufacturing industry (and our Steel industry) may be directly related to the fact that when members of the Westminster elite 'retire' from playing politics they tend to seek directorships with financial (city banks, etc) rather than directorships with manufacturing firms. This simple fact may directly show how divorced from the economic situation our manufacturing industry faces the Westminster elite have become and how furthering the economic interests of the city at all costs has become the Westminster elites central focus.

Quite how desperate the Westminster elite (and the City) have become in their efforts to tap into the finances of the People's Republic of China (one of the world's last brutal dictatorships) may be demonstrated by the fact that they recently chose to veto EU efforts to bring in tariffs to protect the European Steel industry from Chinese steel dumping.

The deterioration in the value of Welsh exports should be a real cause of concern, and is something that a Plaid Cymru government would address in government. The value of Wales’ exports has dropped alarmingly under this government by almost £2.5bn in two years. That’s a huge 17.5% drop at a time when other nations, by comparison, have managed to increase them.

Wales has historically performed well in the past. We export more than we import, and we compare much more favourably than other UK nations. What we need is a strategy to combat this trend. A Plaid Cymru government would establish a Wales Development Agency – a WDA fit for the 21^st century to work globally and throughout the UK, to boost Welsh exports and turn around Labour’s legacy of continued economic decline.

We want to sell our products, skills and ideas to the world. But unfortunately this is the second consecutive year where the value of Welsh exports have decreased significantly and the current Welsh Labour Government (and successive Westminster governments of various political hues) have shown no sign of producing a strategy to stop this continued decline.

The recent alarming figures, contrast with those from between 2007-2011 when Plaid Cymru Leader, Ieuan Wyn Jones was Minister for the Economy, Welsh exports increased by nearly £4.4bn, a 33% increase. During extremely difficult economic times, Plaid Cymru showed what real ambition and strong leadership can achieve. It’s now time for new leadership – Plaid Cymru is the change Wales desperately needs.

CRISIS - WHAT CRISIS?

The last time there was a great economic collapse, some major political and economic changes followed it. Now this was a combination of the legacy of failure to deal with the political, economic, and social consequences of the economic collapse, combined with a desire not to return to a grim pre war world and the positive legacy of the combined effort to win the war and defeat fascism. This 'economic revolution' was established or perhaps enshrined at the Bretton Woods conference (in 1944) and lasted until the late 1970's.

This time around following the greed and stupidity induced banking crisis which triggered economic collapse there has been no 'economic revolution', there appears to be no collective desire to make sure the same mistakes does not happen again – at least amongst the political elite. We are collectively stuck with the same old deeply flawed unregulated 'free market' theories that helped to contributed to the banking crisis in the first place - there is apparently 'no alternative' but simply to hope that the failures of the past don't come back to haunt us in future years.

Yet, the version of 'free market' unregulated capitalism, where the big banks pretty much hoovered up their smaller competitors in the years before the collapse (the one legacy of Thatcher that's never talked about is the eradication (with a few exceptions) of our building societies). The same thing happened with the electricity and gas companies, which were rapidly smothers and absorbed to leave us with the unpalatable, untouchable 'Big 6' cartel members - who continue to squeeze their customers and monopolise the so called 'free market'.

Somehow, while Westminster and Washington were distracted or disinterested we ended up with privately owned, privately funded institutions that had become 'too big to fail'. Their financial misdemeanours largely went unchallenged, un-investigated and unreported (save by a few honourable individuals at Westminster who did their level best to shine a light on the nefarious activities of an increasingly unregulated banking sector).

One take on this is that the Westminster elite (elected and non- elected) have for far too long been far too closely involved with the pernicious influence of the city. It has always been too easy for the Westminster elite to flit back and got into and out of lucrative employment in the City (and back again) with little beyond half-hearted ineffective scrutiny.

This was as true under the long Conservative period of governance between 1979 and 1997 as it was under the New Labour governments between 1997 and 2010 and to a great extent remains largely unchanged if not unchallenged. The questionable privatisations under the Conservative, New Labour and Con Dem governments certainly provided plenty of opportunities for cosy well salaried non executive jobs on the board. 

This combined with the blending of private capital with the public sector, begun under John Major, accelerated by Blair / Brown and continued by the Con Dens blurred the boundaries between the public meant that when the crash happened there was real panic, followed by the handing over of significant amounts of public money to private business (banking) concerns pretty much will little regulation of what was done with it (hence the continuance of the business as usual banking bonus culture even within those banks that ended up effectively under public ownership).

After the current crash, unlike after the crash in the 1930's there has been no period of reflection of reform and very little legislative or regulatory action to try to ensure that the circumstances that led to the crash don't happen again. The speed with which the current unrestrained Conservative government has moved to lighten the tax load on the big banks and to reduce corporation tax - something that a former New Labour government would have probably done - reflects the continued unhealthily close relationship between the City and Westminster.

When the crash happened governments and internal financial institutions stood blinking like rabbits gazing into the headlights of an oncoming car - the hard impact that followed left the rabbits stunned and in shock rather than dead. There has been no fix beyond collective wishful thinking that it won't happen again and perhaps a silent hope that some other financial rabbit will take the head on impact next time.

The 'free market' ideology that we have got lumbered with is perhaps the adoptive child of all those other financial experts who were proved so wrong by John Maynard Keynes (back in the 1940's). Certainly the 'free market' economists have re-shaped (shattered) or shaken our world since the late 1970's and unleashed a ‘free market unregulated capitalism' onto the developed, the developing and the former communist worlds - with some pretty dire consequences.

Whether you live in Russia or the old West by and large (although with a few healthy exceptions) former state / publicly owned enterprises and assets are largely no more. They were depending on how you see it, privatised (on the cheap) or plundered by a new class of carpet baggers who enriched themselves at our collective expense. In the East the process was more brutal and profits of the oligarchs larger and even more unregulated. Embedding and developing democracy was always secondary to making a profit - something that has not helped ordinary people very much at all – but has made the city traders very happy!

MANY HANDS IN THE TILL?

The current Tax Gap is scandalous and exposes how much the Westminster elite has completely disregarded any commitment towards fairness and social justice at a time of unprecedented cuts to public services. Beyond the tax evasion, the real problem is that the Westminster based political parties have been fundamentally compromised by the prolonged and unhealthily close relationship with the City.

We are where we are because of the cumulative effect of the legacy of 18 years of Conservative and 13 years of New Labour government. Over recent decades, successive Labour and Tory governments have literally looked the other way, when it comes to tax evasion, allowing the UK's tax gap to grow to an eye-watering £34 billion each year. Total fiscal consolidation over the course of this Parliament amounts to £120 billon pounds, which indicates the scale of the problem.

Labour can cry wolf as much as it likes over this scandal, but these lost billions are as much their legacy as the Tories'.  Back in 2005, the last Labour UK Westminster Government merged Inland Revenue and Customs and Excise and then proceeded to cut almost a third of jobs in five years (99,000 to 68,000).  They also slashed the budget for tackling the tax gap by nearly 50% (£3.6 billon to £1.9 billion) between 2006-10.

Simply relying on ‘business as usual’ to fix this problem just won’t do – despite the bluster and the rhetoric from the usual suspects to expect Westminster to fix the problem is simply naive. Tax evasion needs to be dealt with worldwide – recently the Swiss banks have crumbled in the face a number of court cases in the US (and a few Swiss banks even collapsed) in relation to tax avoidance by US citizens.

If the USA can do it, then why not the UK - clearly there is a lack of any desire to do anything about it (hence Ed Ball’s silence and George Osborne's lack of urgency). The UK’s Crown Dependency Tax havens are based in some of the few remaining (fiscally useful) scattered remnants of Empire lie at the heart of the tax evasion problem.

Plaid Cymru will not compromise on its commitment to tackling tax evasion. Vast sums of money that should have been collected properly and invested in vital public services such as health and education have been lost. Plaid Cymru, while the Westminster parties fall over themselves to appease the City bankers and their wealthy backers, puts Welsh communities first.

THE LEADERSHIP DEBATES

In many ways it is simply a matter of fairness - Plaid Cymru, the SNP and the Green Party should be included in these debates. Any TV debates have to be a full and accurate reflection of the choices facing voters throughout the whole UK in May. Plaid, alongside the SNP and the Green Party, represents a progressive anti-austerity alliance which, which in the event of a TV stitch up could end up voiceless in the TV debates. The Prime Minister's motives in relation to his call for the Greens to be included so that his opponents come under fire from the left might be best described as deeply cynical at best. The Conservatives would probably prefer not to have any debate at all as the format of the last leaders debate probably cost them victory at the last UK Westminster General election. Personally I have little doubt that the party formerly known as New Labour would privately agree although for different ‘Ed’ related reasons. The media has a responsibility to ensure that the voters are fully aware that there is an alternative to the Westminster austerity agenda and in the interests of democracy the compelling case for leadership debates needs to continue to be made.

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.  

HONOURS EVEN…

The Donations Award

The questionable relationship between big donations (and donors) to political parties might in some circumstances be considered to be par for the course (to use a golfing term). Significant donors to the larger Westminster village based (and focused) political parties often tend to get rewarded with gongs, baubles and trinkets. Between 2006 to 2012 those donors giving £50,000 or more to Westminster based political parties were around 6,000 times more likely to receive a peerage than the ordinary person on the street. It has been 80 years since Maundy Gregory became the first (and only) individual to be prosecuted for selling honours and the relationship between cash (and kind) donations and honours remains as strong as ever. The House of Lords Appointments Commission which (nominally) oversees the award of honours is in truth pretty powerless and mostly accepts party leaders’ choices in all but the most exceptional of circumstances. Selling honours is illegal yet more than a few years ago a parliamentary committee came to the conclusion that any successful prosecution would be unlikely unless the culprits were caught in the act so to speak, so the law remains unchanged, so basically the Westminster based political parties have a free-for-all. The honours system as long as it remains under the control of Westminster will remain flawed and abused with little prospect of any meaningful reform. What this on-going abuse of the honors system by the Westminster based political parties means in practice is that the award of honors to hardworking individuals who have worked tirelessly for our communities, to society and to the lives of others over the years is continually tarnished and the value of honours is diminished.