For a sober analysis of the issues read what Adam Lent has to say.
Mar 252009
I’m blogging from the House of Commons where I am speaking at a meeting organised by PCS and War on Want on tax justice.
I’ve just been challenged by Michael Meacher MP to outline a plan of what I would do if I was Gordon Brown between now and the G20, next Wednesday. My response was this:
- The UK should admit that the Crown Dependencies and Overseas Territories are ours – as the current crisis in The Turks & Caicos have proven in the last week, and that we can therefore reform them;
- Publish the terms of reference for the Foot Commission into UK tax havens so we know that reform is going to happen;
- Announce that the forthcoming banking code will compulsorily ban banks from undertaking structured tax avoidance;
- Announce that this ban will be extended to all UK companies through a general anti-avoidance provision being enacted in the UK;
- Support the call for country by country reporting which will make all companies go on record about their use of tax havens;
- Announce an end to HMRC redundancies so the resources are available to deal with automatic information exchange which we so badly need;
- Announce unconditional support for the amended EU Savings Tax Directive which would shatter the use of offshore structures in many places – and that we will impose this on our own tax havens, as we can.
All of that is possible.
None require international support.
All would offer clear indication of leadership that would set an example to all at the G20, and all those watching it.
Mar 252009
I admit the following is a press release but it’s a pretty good description of what I’ll be doing much of next week.
A coalition of NGOs – the G20Voice – and the UK government are breaking with convention and, for the first time, allow 50 bloggers to report live and direct from the G20 summit, on 2 April 2009 in London.
This unprecedented event, backed by the Government, gives the bloggers and their audience the chance to engage with and influence world leaders on issues including development, climate change and women’s rights. The bloggers were nominated by the public, with more than 700 nominations received in 12 days.
The organisations behind G20Voice are OxfamGB, Comic Relief, Save the Children, ONE and Blue State Digital. G20Voice is a collaborative effort demonstrating the breadth of commitment to ending world poverty and inequality.
The 50 include a broad range of influential, knowledgeable and popular bloggers from the G20 countries and the developing world. These include:
Sokari Ekine – a pioneering Nigerian blogger
Jotman – an undercover blogger exposing injustice in Thailand and Burma
Daudi Were – a leading organiser of African bloggers
Dr Kumi Naidoo – head of GCAP and contributor to Huffington Post
Cheryl Conte from Jack and Jill Politics – representing the US “Black bourgeoisie”
Enda Surya Nasution – the father of Indonesian blogging
Rowan Davies – representing the 200,000 members of Mumsnet
Rui Chenggang – China’s leading economics broadcaster and blogger with 13,000,000 viewers every evening on CCTV
Richard Murphy – the leading expert on Tax Havens.
They will be joined by thousands of bloggers online at www.g20voice.org with audio and video livestreaming, and also via skype broadcasts from inside the summit.
There is a full programme of events for the 50 invited bloggers. The event begins on 1 April with the official launch, including a series of briefings and round table discussions. On the day of the summit bloggers will have access to briefings from senior figures and world leaders. Members of the delegations have been invited to speak with the bloggers to discuss the developments in the main summit chamber.
Journalists are invited to come to the blogging tent to meet and talk with bloggers throughout the day.
Karina Brisby, G20Voice project founder and Digital Campaigns Manager, Oxfam GB said: "The G20Voice project was inspired by the articulate, engaging and often outraged posts, tweets, podcasts and videocasts from bloggers all over the world about the current economic crisis and how that affects the issues they are passionate about such as poverty and climate change.
"We are seeing a huge increase in the number of people around the world using digital tools to inform themselves and then contribute to debates about the issues that affect their lives. G20Voice recognises the importance of bloggers and gives them a unique opportunity to report back to their audiences direct from the G20 Summit itself."
Adrian Lovett, Director of Campaigns at Save the Children said: “G20Voice will tear back the curtain as leaders draw up their blueprint for global recovery. Thanks to G20Voice at this summit the world will be watching. Bloggers will witness the summit from the inside – and the world will know whether leaders are building a future fit for the world’s children, or one that rewards only the rich. Gordon Brown has set the bar for the London G20 summit next month by promising that the UK will meet its aid commitments despite the economic downturn. He must ensure other G20 countries do the same. If action to prevent children dying isn’t taken now we could see this financial crisis claim the lives of a generation of children.”
Oliver Buston, Europe Director of the Africa campaign group ONE said: “At ONE we’ve always been focused on empowering individuals to raise their voices against extreme poverty. This group of citizen-journalists includes some of the most articulate voices on this issue, and it’s exciting to be a part of bringing them to this international stage. The world’s poorest people are being hit hardest by a global crisis not of their making – the bloggers will have a chance to ask tough questions of world leaders, and demand solutions that will benefit everyone, not just the wealthy few. “
How to Find G20Voice Online
web: www.g20voice.org
twitter: @G20Voice
flickr: http://www.flickr.com/g20voice
youtube: http://www.youtube.com/G20voice
moblog: http://moblog.net/voice
For all practical purpose Mervyn King is a a civil servant. He’s also onbe who has over stepped the mark. Civil servants do not contradict their ministers.
He’s wrong on other counts. He’s so god at economics he did not see the weaknesses in his regulatory system. He did not see the crash coming. He kept interest rates up when they should have been cut. He did not see the importance of supporting jobs when Danny Blanchflower did. So why is he right now?
Why is he right now when his prescription is for more unemployment, no greening of the economy and prolonged slump. Why is he right now when his inaction is designed to preserve the status quo for the City that has failed the UK economy? And why is he right now about fiscal policy when he has never had any real belief in it?
Ignore the man I say. Sack him, better still.
And as for what to do on April 22 – lest we forget it, budget day – the answer is simple. We do need a fiscal stimulus. Not less than £25 billion. But I accept not all should be paid for by debt. Minimum tax rate of 32% on those earning more than £100,000 – removing all allowances to achieve this is a start. Make it 40% minimum tax on all earnings at £200,000. Charge NIC at 11% on all investment income over £5,000 pre annum (pensioners apart). Abolish the domicile rule. Introduce a rule that all UK citizens are UK tax resident and taxable on world wide income unless living permanently in a country with a double tax treaty with the UK – and can prove they pay their tax there. Bring in a General Anti Avoidance Provision. Bring in a Stop Tax Haven Abuse Act. And so on, and on.
Oh yes, we can afford a fiscal stimulus. There is ample money available. We just have to chose who should pay for it. Some of us have the answers. Gordon Brown should be listening.
President Obama has said:
We must crack down on offshore tax havens and money laundering.
Now you could say that is remarkably little comment on this issue.
You could say it says all that needs to be said.
I’ll just settle for it.
For obvious reasons I rarely mention the many discussions I have with journalists. I leave them to get on with their stories.
But every rule needs to be broken sometimes. I’ve just had a call from a journalist on the FT who told me they are planning to do a big feature on the benefits of using tax havens – next week.
There could be no better indication of where they stand on this issue.
There could be no better indication of the contempt of the financial services community, of which they are a part, for the G20 process – which is meeting to curtail tax haven activity next week.
Unsurprisingly they did not get what they sought from me – which was a list of tax haven tax rates and how a UK based person could take advantage of them.
I reminded them of Denis Healey’s old maxim:
The difference between tax avoidance and tax evasion is the thickness of a prison wall.
In most cases those using a tax haven should be the wrong side of that wall. It’s only secrecy that saves them. Which is why it has to go.
And why the FT really has got to understand that promoting abuse of society is not a long term option for a viable business.
Mar 242009
I got a mail last night from a person who knows a bit about tax havens / secrecy jurisdictions. He said
Havens are are like whorehouse on the edge of town. The police raid them periodically but they are never shut down because the mayor is in there whenever they call with his pants around his ankles.
It’s not a pretty metaphor. It may have an element of sexism within it. But it works.
We need transparency to show that the mayor is in there.
And that’s also precisely why they will fight so hard to keep us from knowing what is really going on.
Mar 242009
These are my links for March 17th through March 24th:
- FT.com / UK – Cameron acts to end confusion – .
The Tories are re-arranging the deckchairsAnd not a word from them on tax havens, I note
- FT.com / Asia-Pacific – China calls for new reserve currency – .
Yes please - Tax havens may find days of banking on secrecy are numbered – The Irish Times – Tue, Mar 24, 2009 – .
Harsh words included from John ChristensenRightly so.
- U.K. Should Refrain From Fiscal Stimulus, CBI Says (Update1) – Bloomberg.com – .
Let’s unpick what the CBI means: please support banks but please don’t help ordinary people is the messageCallous indifference I call it
Dire economics to.
Mar 242009
The FT reports:
The friction between Switzerland and Germany over bank secrecy reached government level on Monday, as the Swiss defence minister confirmed he had traded in his official Mercedes limousine for a French car.
It may sound petty, but the symbolism is important. Germany has quite appropriately named Switzerland as a state engaging economic warfare upon it.
Switzerland is fighting back, not least through the pages of the Financial Times which yesterday reported that:
Evading tax is, of course, just one reason why people deposit money offshore. The Swiss note that their secrecy laws date back to 1934, when they were enacted partly to protect German Jews and trade unionists from the Nazis. More recently, rampant inflation, political corruption and runaway crime have been among other reasons for wealthy people to deposit assets outside their own country.
This is wholly untrue. Swiss banking secrecy was not created to protect the Jews and trade unionists from the Nazis. There was no such international concern on their behalf in 1934. It was created to prevent the French repeating an exercise they undertook in the early 1930s to secure the names of at least 2000 prominent citizens tax evading in Swiss bank accounts. Numbered bank accounts were the Swiss response.
The claim that banking secrecy protects human rights is a myth. It was created to protect those evading their responsibility to pay tax in other states and that remains its primary purpose today. Its secondary use is to hide the proceeds of political corruption and runaway crime. It is not a safe harbour from such abuse, it is the mechanism that makes such abuse possible.
It is notable that in the same Financial Times article the following is said:
“Of course there is concern. You’re talking about competitive advantages that are being put in jeopardy,” says Michel D?©robert, director of the Geneva private bankers’ association. Ivan Pictet, managing partner of the bank created by his family 204 years ago, warned last month that the Swiss banking sector could shrink by half if secrecy were abandoned.
Let me be clear: the competitive advantage that the banker is talking about is the right to handle stolen goods with out fear of prosecution. What is apparent is that the second banker thinks that half of all Swiss banking business does involve that process of handling stolen property.
And later in the article there is the following quote:
Many Swiss bankers see the international pressure in a much wider context. “This is not about bank secrecy or hiding taxes. We’re fighting a commercial war. The next step will be to go after Swiss industry,” says Eric Syz, founder and owner of Syz & Co, a medium-sized Geneva private bank.
He is wrong: this is not a commercial war, it is economic warfare between nation states.
Switzerland is a secrecy jurisdiction. Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain that is designed to undermine the legislation or regulation of another jurisdiction and that, in addition, create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.
When Germany is challenging Switzerland for acting in this way it is acting in self defence. Switzerland is unambiguously the aggressor state here. They can dress up their actions in a cloak of human rights. The reality is that they are simply helping people steal tax revenues from other countries. And I hate to say it, but wars have been fought over such issues.
As someone who was a Quaker for several years and who remains very much in sympathy with the Quaker approach to living I abhor the idea of war. It is why I place my hope in negotiation. But let me be unambiguous: that negotiation has to achieve real results. Places like Switzerland, Jersey, Cayman, Luxembourg, and the other tax havens (plus those lawyers, bankers and accountants who work within them) are seeking to undermine the democratic way of life that has in turn underpinned our well-being by destroying the income streams that governments need to provide services that electorates demand and have indicated their willingness to pay for.
That is why this issue is not petty. This issue is about preserving democratic society. It is about the right of society to make choices on behalf of whole populations in the best interest of all.
And if we lose the tax haven argument we have no hope on green issues: those who have and abuse wealth will continue to abuse the planet through their use of tax havens to preserve their short-term wealth at a detriment to life itself if the secrecy that tax havens permit is allowed to continue.
I do not expect miracles from the G 20. I do expect it to begin an irrevocable process of change. The world needs that.
