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.

ALL IN IT TOGETHER – NOT!

Tax evasion! Surely not!

The news that Google has done a deal with the Conservative Westminster government over it’s unpaid UK tax bill, might be considered to be a step in the right direction.  Save for the fact that Google is 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 giants 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 various Westminster governments have been more than a little half-hearted when it comes to clamping down on tax avoidance or fiscal consolidation. The PM may have slagged off celebrities, for using a tax avoidance scheme in Jersey, a couple of years ago. Yet he remains reluctant to deal the tax havens that just happen to be UK Crown Dependent territories.  Successive Labour and Tory governments turn 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.

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 that we are left with is that the Conservative Westminster government (and perhaps the Party formerly known as New Labour) sincerely hope that the issue of unpaid tax, will quietly go away. The US government continues to actively pursue tax evaders, both foreign and domestic, yet 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 remains firmly 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.

GREED IS GOOD?

One definition of tax is that it’s the fair dues we all pay to participate in our society – to fund significant projects that benefit us collectively and to provide a safety net for society. Tax is and probably always will be (and probably always has been) a subject that stirs people up. The trick to realising that you have been sold a pup, is to notice, the Party formally known and New Labour and the Conservatives have been hooked on the idea that either by cutting, reducing taxation for the rich (and corporations) or even perhaps by turning a blind eye to tax evasion, avoidance, etc - that wealth will trickle down from the top to the rest of us. 

This theory pumped out by Ronald Reagan (and Mrs T) in the 1980’s is still dominant; it’s not a new theory. US Presidential candidate William Jennings Bryan (in 1896); who noted ‘that if you will only legislate to make the well-to-do prosperous, their prosperity will leak through to those below’. ‘Trickle-down theory’ first appeared in the 1932 US Presidential campaign, when Democrats used it to hammer Republican Herbert Hoover’s plan to engineer economic recovery by making the rich richer.  

Fifty years later even Ronald Reagan’s supporters struggled to sell the idea to their own party, even George Bush (Senior) mocked Reagan’s theories of supply-side economics as ‘voodoo economics’ at least until he got the Vice Presidential slot. On this side of the pond there were monetarists who told Mrs T straight that the idea was nonsense and that it would not deliver results  - naturally she did not listen.

Reagan’s first budget brought in a moderate reduction in the basic tax rate, this was followed by the a drastic reduction of the top tax rate from 70 to 50 percent and later still to 28 percent. If the theory was correct then, the public coffers should have swelled with enough extra revenue to balance the budget within one to two years. Unfortunately, the theory was incorrect, within the eight years of Reagan’s Presidency the total Federal deficit soared from around $900 million to some $3 trillion dollars.

What followed has been described as an orgy of speculation in stocks, shares and real estate (this was the era of ‘Greed is good’), ordinary Americans stopped saving and started spending. Through the 1980’s there was a near continuous decline in long-term capital investment – on which economic growth and jobs were dependent.  To make matters worse the USA went into recession and the Federal Reserve had to raise interest rates to hold down the inflationary consequence of the tax cuts, by 1981/82 unemployment in the USA rose about 10% for the first time since the aftermath of the great depression in the 1930’s.

The gulf between the wealthy elite and the rest of the population became a chasm, the rich got richer and parallels have been drawn between the 1980’s and the Gilded Age of the 1870’s (income tax was abolished in the US and was only reintroduced during the First World War).  The 1980’s for the mega rich in the USA was an era of conspicuous consumption and extravagance – yet oddly enough very little of this prosperity tricked down to the American middle and working classes.

Average US family incomes did not return to the level they were at in the 1970’s until 1987 – wile this may have sounded good, the harsh economic reality was that Americans were now working harder and longer – in 1973 an average American worker had 26.2 hours of leisure time per week, by 1987 this was down to 16.6 hours per week. Jobs were also now less secure, Americans now worked on short-term of temporary contracts in increasingly un-unionised working environments. For blue-collar workers the 1980’s were a disaster, wages fell through the decade as employers threatened to move production overseas because the workers had priced themselves out of employment.

The right wing, in the US and here in the UK crowed about how government should not interfere with (or regulate very much) the ‘free market’.  This hands off attitude was also duly applied to the US savings and loan industry, laying the groundwork for the collapse that was to follow in 2007. The only exception being that if things went really pear shaped then it was expected that Government would collect the tab. One side effect of all this was fraud, 650 savings and loan companies collapsed, with the $1.4 trillion dollar tab being picked up by the US government.

On this side of the pond, building society after building society were floated on the stock market – and within a few years were readily absorbed by increasingly greedy banks.  In the US, exploitative working practices and sweatshops reappeared encouraged by the effective withdrawal of regulation and inspection. The 1980’s also saw the growth of increasingly powerful media empires and a concentration of power in fewer and fewer hands despite much reputed mantras from government about greater competition and choice for consumers.

We are all still living with the consequences of that period in the 1980’s when an ideologically driven obsession with the ‘free market’ and ‘privatisation’. Heaven help anyone who dare question these sacred truths – the very heavens may fall. The problem is that the market was rather than being ‘free’ it was pretty much increasingly unregulated as Governments in the USA and the UK largely looked the other way – tax collections fell and ironically tax evasion soared.

This state of affairs was tolerated by the long time dying Major Government and largely encouraged by the former New Labour governments of Tony Blair and Gordon Brown and barely mentioned by the former Con Dem government. Even the crash has not changed things - there was some talk about tacking tax evasion matched by continuing (significant) staff cuts to HMRC.

It is interesting because tax evasion and tax avoidance, at least outside of the UK, is rarely out of the headlines with many heavily indebted governments being particularly 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 now appear to be as close as possible to being governed by the sons of bankers and the sons of the City in the interests of the City (of London).

The big problem is that the UK Government is in up to its neck when it comes to tax evasion. The UK Westminster is 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 Westminster beast lies the City, which may explain why the former New Labour government, the former Con Dem coalition government and the current now unrestrained Conservative government (were and) remain reluctant to do anything about the problem as some (but not all) of the city banks are hand in glove with drug dealers, dictators, rogue states and terrorists when it comes to money laundering . The inertia may be explained by the lure of comfy lucrative seats on the board for former Westminster politicians.