The Sunday Times reported yesterday:
The campaign to embarrass the members of U2 over their tax avoidance is getting its boots on.
Following a demonstration outside the offices of the Department of Finance in Dublin on Wednesday, campaigners continued their crusade on Friday in London.
During an “impromptu” gig by the band on the roof of the BBC headquarters, a small group of demonstrators staged a seemingly spontaneous protest berating the band for exploiting a tax shelter in the Netherlands.
Agitators held makeshift placards bearing inscriptions such as: “Bono: pay your taxes” and “Bono: don’t be a banker”. Another held a home-made sign with the caption: “We’ll downl’d it 4 free and give the money to charity”.
And as they note:
Richard Murphy, a senior adviser with the TJN, said: “We were involved with the Dublin protest but the London one seems to have sprung up without the involvement of tax reform groups. It shows the anger on the ground about U2’s tax affairs,” he said.
Murphy said that he would be “very surprised” if protesters didn’t target the band’s tour. “I think this issue is going to haunt U2,” he said.
I liked this:
A number of Facebook groups critical of the band have already been established, including one entitled Make Bono History.
My personal view is Bono is making poverty reality.
As I said on the Guardian blog yesterday:
The issue as far as we are concerned is one of hypocrisy, and that hypocrisy relates to several matters.
Firstly, we do not think that anyone can ask a government on moral grounds to extend its resources on any issue and then deny that they have a moral obligation to pay their taxes in the place where they really reside. U2 do not reside in the Netherlands. They moved their tax affairs there solely because the Irish government introduced taxation on their royalty income and they prefer to pay a very low rate of tax ( probably 5%) in the Netherlands rather than pay still ludicrously low rate of tax of 12.5% in Ireland on that same income. This was pure avoidance behaviour, artificially, in our opinion, relocating an income stream from one country to another to obtain a tax advantage. I stress, this may be legal, but you cannot in our opinion argue that there is a moral dimension to the use of taxation revenues when you do not think that there is a moral dimension to the payment of tax. That is one of the issues that we are focusing upon here.
Second, we are focusing upon the use of tax havens by Bono. It is now widely agreed that tax havens do harm. They undermine the rights of democratic governments to fulfil the mandate they have been given by the electorate by denying them the resources that are rightfully theirs. We think that any successful development agenda has to be pro-democracy and the use of a tax haven such as the Netherlands ( and in this context the Netherlands is very definitely a tax haven) indicates a lack of understanding of this issue.
Next, tax havens are used for illicit financial flows out of developing countries. The Global Financial Integrity Project in Washington DC has recently shown that at least $800 billion a year flows out of developing countries to develop states, all of it illicitly. Most of that flow through tax havens. Some of it will undoubtedly flow through Netherlands structures which are identical to those used by U2. You cannot tackle illicit capital flight from developing countries and then use identical structures for your own taxation purposes. These structures have to be abolished for both purposes, you cannot deliver one and not the other.
Finally, Bono has, despite our very best efforts, refused to accept that tax is part of the development agenda, no doubt for his own personal reasons. I have met with his personal development agency - DATA - and they are not recognising this essential fourth stage in the development agenda. We have moved from a trade to debt and now we are moving to tax. Many of the agencies were backed this campaign against Bono including Oxfam and Christian aid have done so precisely because they recognise that a post aid world is essential - our goal should be to create countries able to stand on their own two feet, with democratic governments, held accountable by the electorate precisely because that electorate pay tax to them, and because those governments have it within their power to tax the multinational corporations who are based within them. This is what we hope for - countries that can provide for their own people and their educational, health care and other needs. Without tax that is not possible.
But have we heard Bono saying this? No, we haven't - not once. And we think that indicates that he is completely out of step with the development agenda that now exists. His supposed philanthropy is of another era - and it will not work.
Our campaign is not, therefore, a simple personal attack. Far from it. It is ideologically based. It is based upon critical analysis. It is based upon the clear evidence that the form of tax planning that Bono is using is harmful. And it is based upon his failure to in gauge with those of us who are taking this agenda forward.
I am proud to be associated with those who organised this stunt.
I would be happy to meet Bono anywhere to discuss the issues that we raise — but in front of an audience. This man has to be held to account for what he does.
Will he accept?
I’m not betting on it.
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I am impelled to write to say that on this issue (and only on this issue) I disagree with you entirely, Richard. The Irish government have, over recent years, been deliberately undercutting other member states by offering reduced rates of tax compared to the others in order to attract business and jobs to the Republic. Good luck to them. I understand that a certain well-known Italian motorcyclist used Irish companies to “mitigate” his tax liability on earnings (as well as the UK non-dom regime). Until we have harmonised rules in the EU (unlikely to be in our lifetime or our even our grandchildrens’) then this form of tax competetion is inevitable, and possibly even to be welcomed. You know full well, that in general rates of corporate tax in the Netherlands are higher than in Ireland. To describe the Netherlands as a tax haven is a dangerous over-simplification. I know there’s a special regime for royalties but many member states have special regimes for one form of income or another. You should be focussing on the guys using the tax havens to evade taxes altogether rather than supporting a government that is, deservedly, getting a taste of its own medicine. EU member states deliberately promote special tax regimes in order to attract investment on the grounds that the tax foregone by virute of the regime will be replaced by other taxes such as income taxes on employment income and indirect taxes on spending. It is simply not accpetable for the Irish authorities to start bleating now that investment is drying up about unfair tax competion from other EU member states.
Colin
http://somo.nl/html/paginas/pdf/netherlands_tax_haven_2006_NL.pdf
Please read it
And please brief yourself on what a tax haven is. Have you heard of ring fences?
Please justify tax competition.
Richard
So U2 are resident in Ireland, so if they are using a Dutch company, then they will be paying Irish tax on any dividends they recieve from remittances from their Royalties.
I also see the irony of Ireland complaining about this and they have been supporting tax avoidance for years, so really it’s seems crocidile tears about U2 doing the same
May be you can show me where this is illegal, even immoral? As for Christian aid and Oxfam, their complaints are against transfer pricing or corruption leading to reduces taxes in third world countries, please expalin what this hato do with U2?
Are you now suggesting Ireland is a third world country?
as for “Bono has, despite our very best efforts, refused to accept that tax is part of the development agenda, no doubt for his own personal reasons”
May be it’s because you weekly slag him off for giving lots of money to those less fortunate that himself, instead of greedy Irish politicians. perhaps.
As a downmarket demagogue, bongo doesn’t do debate:
And another thing. It will be remembered that, last May in Dublin’s Merrion Hotel after a Springsteen gig, Bono undertook to take part in a public debate with Dave Marsh on the effectiveness of celebrity politics. A couple of weeks later, U2’s New York office told Marsh that they’d schedule the discussion once the new album was finished. Like, now. So I emailed Marsh last week to find out the details.
“He backed out, without offering an explanation (and I was too smart to ask)” came the prompt reply. “We may draw our own conclusions.”
source
Richard – you’ve missed my point. I am not in favour of tax competition at all, but that is the situation the entry into the eU coupled with complete of failure to get anywhere near tax harmonisation has got us. There are a lot of countries in the EU that offer special regimes – the UK is often described by Italian tax advisers as a tax haven for its non-dom regime which ring fences non UK source income and keeps it outside the charge to tax for rich foreigners who spend a bit of time in the UK. Italy can also be described as a tax haven for its 12.5% rate of tax of gains on disposasl of portfolios shareholdings. Until there is some form of harmonisation around Europe the fact is that people are going to take advantage of these special regimes and udner the EU treaty people like Bono have complete freedom to move their capital and conduct their business in any member state they like, using any form of EU vehicle that they like. Arguing about whether or not a place is a tax haven or not misses the point.
Creg
Please read this blog.
I have answered all your points
If you have nothing to add to debate soon I will begin to block your comments
Richard
Richard, your argument on where U2 should be taxed depends on knowledge of where the taxable income arises – I suspect you don’t know this. Morality is fine but you don’t have a monopoly, and nor does government. You could argue that Bono at least goes out and does something about it – but you don’t!
What surprises me – you have no evidence that U2 have broken any laws, but you seem content to whip up hysteria against individuals. Do you support mob rule?
Actually it doesn’t, your reaching as usual, essentally U2 are using some tax avoidance, so do some bad corrupt African politicians, so Bono must be tarred with same bursh
but obviously from your comment there is no debate here, so I will block myself, goodbye
Creg
Your choice
If you can’t stand the heat, leave the kitchen
Or in your case – as you can’t make a case, give up
Richard
A number of Facebook groups critical of the band have already been established, including one entitled Make Bono History.
I just had a quick count and there are now eleven “Make Bono History” groups, but not all relate to his tax arrangements!
C:-)
Alastair
I think you’re an accountant. In that case you should know your argument is absurd. Who cares where the income arises – it is being routed through the Netherlands to save tax. That is the issue.
As for morality, since when was being selfish moral? Since when was being hypocritical moral? Do you have problem with either?
And as for illegality- I have never for a moment suggested it. But the law provides choices. Bono has made bad ones. Why can’t I say that? My argument is logical, and according to press reports has more than 80% public support. That will do me.
And let’s be clear, I’m not lynching anyone: I am saying his right to lobby for what he wants (which is I think miguided) is one he can exercise – but he should not be given the right to command government funds as a result. That’s all. I call that democratic debate.
Maybe that’s what threatens you
Richard
Hello Mr Murphy.
Please forgive this possibly naive comment – I’ve had no tax training, but I would like to ask for clarification about your statement:
“Who cares where the income arises – it is being routed through the Netherlands to save tax”.
For when browsing in a big legal tome in a bookshop (sadly I forget its title) it recounted a case where a UK-domiciled individual setup an offshore company and routed all the income and expenses through that company to avoid UK tax.
When it came to court, they said firmly: “You can’t avoid UK tax like that”.
So in terms of your justified keeness to see UK-originating income being fully taxed at the appropriate UK tax rates, from my reading of that legal book it seemed as if re-directing UK income elsewhere is forbidden by law, and implementing that law could act to ensure proper taxation occurs.
So forgive me, I can’t see why you say the place of origination of the income is irrelevent.
I know you are very busy, but please could you take a few moments to expand on this, for I thought that was a pillar of your argument, which I hope I faithfully paraphrase below:
“people should not be allowed to be taxed on income arising in one country except by the tax regime in force in that originating country, and hence should not be allowed to move it to a more favourable jurisdiction” – doesn’t that imply that place of origination of income is key?
Please help.
KC