2009 September » Tax Research UK

Beyond belief

Banking, Ethics Comments Off

Sep 302009

Britain’s financial regulator is demanding information from the country’s biggest banks on how they structure themselves to minimize tax payments and what tax advice they give corporate clients, advisers to the banks said.

The Financial Services Authority has started to ask for the data as part of bank inspections called Arrow visits, the professional advisers said. Tax matters had almost always been handled solely by the U.K. Treasury’s Revenue and Customs division in London.

The 1.4 trillion-pound ($2.2 trillion) bailout of U.K. banks and demands to plan for potential collapse helped spark FSA interest in banks’ tax plans, the advisers said. U.K. Chancellor of the Exchequer Alistair Darling yesterday blamed the “stupidity” of bankers for bringing Britain’s financial system to within hours of collapse last year.

Not one word of that would surprise any reasonable person, I would suspect. But then note this comment:

“We are seeing more and more pressure on our larger clients that are systemically important,” said Bob Penn, a regulatory lawyer at Allen & Overy LLP. “It’s politically motivated. You have to ask what the legitimate interest in engaging with the tax-planning functions of banks is.”

The state bails out ALL banks in the UK (they would have all failed if RBS and HBOS had gone, as would otherwise have happened) and a City lawyer thinks it is ‚Äòpolitical’ to ask about their tax planning?

Too right it is. And very right that it is. These banks have sought to undermine the democratic governments who bailed them out for too long by seeking to deny those governments the resources that were rightfully, and in some cases, no doubt, legally theirs. We’re not just talking ‚Äòpolitical’ here: we’re talking about saving the political system from banks here.

But there’s no clear indication those who run financial services believe in democracy: if they did they could not act as they do.

The JEP and Panorama

Banking, Jersey Comments Off

Sep 302009

Tax Justice Network: Fear, loathing and a reality check in Jersey.

A blog worth reading. John Christensen reviews the response to the Jersey Evening Post’s report on the recent Panorama that featured banking on the island and finds significant support for the TJN position.

This is good:

So the final word goes to BritAbroad (comment 45) who has grappled with his conscience and now wants out:

To all those above complaining about the quality of invesitigative journalism: you are missing the point by a country mile.

When all is said and done, Jersey does tax avoidance or ‚Äòwealth management’ for high net worth individuals. Now, don’t get me wrong, it is terribly well regulated and totally above board. It is perfectly in accordance with international laws and accords and we were absolutely resplendent in our glory as one of the first movers to the OECD white list.But, you see, none of that, none of it at all, makes it right.

Well and good, you can disagree. But, for me it’s all just a bit to close to home. Because, you see, and I may despise the place and all those who are running / ruining it, but, when all is said and done, I’m actually from the UK. (Which used to be quite a nice little island itself once upon a time).Back there, thnaks to Jersey and places like it, the tax burden is shifting inexorably from those most able to make a contribution to those who can’t quite afford the very best tax advice. So, it’s MY family and friends back home, the affable, muddling, middle class that are now increasingly carrying the burden and that’s simply just not right.

Personally, I’ve had quite enough dinner table arguments with friends and family from home and (beautiful as it is) I’m leaving this place at the end of the year. **cue applause**

Oh and Jersey, stop living in denial please. The first step on the addict’s path to recovery is admitting that you have a problem. Gold stars for regulation are great: be proud of them. But, good regulation only enforces the rules – and be in no doubt that you are not making them.

So to Panorama. Put simply: a poorly executed program, making very salient points.

The blind leading the blind

Banking, Isle of Man Comments Off

Sep 302009

This letter was in the Manx Herald. I think it self explanatory.

Recently government officials from 24 small nations visited the Isle of Man as part of the Small Countries Financial Management Programme. Senior officials of central banks, finance ministries and regulatory bodies took part in a two-week executive education programme designed and run by Oxford University’s, Sa?Ød Business School.

A number of Isle of Man experts took part in the education sessions including John Aspden, Financial Supervision Commission (FSC) chief executive, Sir Miles Walker, the Isle of Man’s first chief minister, John Cashen, deputy chairman of the FSC and John Corlett QC, Attorney General.

Mr Cullen, who lectures at Oxford University’s, Sa?Ød Business School and is a commissioner with the FSC, also took part in the educational sessions.

He said that having individuals with a wealth of knowledge and experience about the Isle of Man’s development as an international financial centre was particularly interesting to delegates from developing nations.

So now we see the IoM setting itself up as an authority on how a small nation should best get its financial affairs, budget, banking regulation and compensation scheme in order. Extraordinary that this offshore centre that has a history of 3 failed banks on its hands, no bank of last resort, a seriously flawed depositor compensation scheme, & a Financial Supervision Commission that gave credibility to a worthless parental bank guarantee, should consider itself to be the best small nation to tell others how they should sort themselves out.

It is even more incredible that amongst those who lectured these delegates were the very people who were the architects of the downfall of Kaupthing IoM, one of the biggest cock-ups in banking history. Speaking with authority were John Cashen (Director of the failed Kaupthing bank and Deputy of the FSC), and John Aspden the chief of the FSC who backed him in his decision that brought down the bank when over half the bank’s assets were lost when they were transferred unprotected to Kaupthing UK which went into administration.

Many look forward to seeing the full report of this expensive jamboree, but if such a report is published it is doubtful that it will be put in the public domain. Transparency on the IoM does not extend to that sort of publicity.

This event was one where figuratively the blind set out to lead the blind. The IoM refuses to do justice to thousands from around the world who lost their life savings on the Isle of Man, so it has no moral authority or credibility to lecture other small nations on how best to run their affairs.

Expats & others throughout the world are being warned: DON’T BANK ON THE ISLE OF MAN – there are now 3 pages of Google devoted to that topic & 30 videos on Youtube.com.

Jim for Justice

The Sun is backing the Tories

Blogging 1 Response »

Sep 302009

No surprise there.

I was a little surprised to get a mail form them telling me so. They have never mailed me before.

I didn’t know they needed their message on this blog, but apparently they do.

Weird that the printed media now has so little faith in its own ability to deliver its message that it wants blogger’s support.

Eva Joly makes her mark in the EU Parliament

Development, Europe, Secrecy jurisdictions, Tax Havens Comments Off

Sep 302009

EU Politics News – theParliament.com.

The chair of parliament’s development committee has called for tough action against multinational companies who “seriously harm” poor countries through their use of tax havens.

Eva Joly, a former magistrate who has gained a reputation for campaigning against fraud and corruption, made her comments at a debate in Brussels on Tuesday.

She said tax havens were used as a means of tax evasion but the “real problem” was the funding and resources she says is subsequently denied to often developing countries, such as those in Africa and India.

Eva is an astonishing woman who has now joined the parliament. She has lost none of her fire!

A commitment to progressive taxation

Economics, Politics 3 Responses »

Sep 292009

Gordon Brown’s Labour conference speech in full | Politics | guardian.co.uk .

On this one Brown hit the right buttons:

For there are only two options on tax and spending – and only one of them benefits Britain’s hard-working majority.

One is reducing the deficit by cutting front line public services – the conservative approach.

The other is getting the deficit down while maintaining and indeed improving front line public services – the Labour approach.

So we will raise tax at the very top, cut costs, have realistic public sector pay settlements, make savings we know we can and in 2011 raise National Insurance by half a percent and that will ensure that each and every year we protect and improve Britain’s frontline services.

Some of those are weak commtiments but the clear mesage is progressive taxation remains on the agenda. as it should be. And that spending will be protected in many areas. As it also should be. Not least because spending is the only way to get out of this recession.

PR – wrong system, too late

Politics 4 Responses »

Sep 292009

Gordon Brown’s Labour conference speech in full | Politics | guardian.co.uk .

Brown’s got this one horribly wrong:

There is now a stronger case than ever that MPs should be elected with the support of more than half their voters – as they would be under the Alternative Voting system. And so I can announce today that in Labour’s next manifesto there will be a commitment for a referendum to be held early in the next Parliament it will be for the people to decide whether they want to move to the Alternative Vote.

Wrong system – ATV does not produce PR. Only the single transferable vote will do that. And the referendum should be next May – on the day of the general election.

His failure to pick winners continues – and he’s now nearly out of time.

Gordon Brown – 0.7% for aid to be law

Development 2 Responses »

Sep 292009

Gordon Brown’s Labour conference speech in full | Politics | guardian.co.uk .

From Brown’s speech:

“And let me say what was once an aspiration – 0.7% of national income spent on international development aid, has become with Labour a promise, and will in future become a law. We will pass legislation that the British government is obliged to raise spending on aid to the poorest countries to 0.7% of our national income. Others may break their promises to the poorest, with Labour Britain never will.”

That’s good news.

No doubt the Tories will categorise the Afghan war as aid if they can. So the defitnion clause in the new law had better be good.

Krugman: balanced budget would be “worst thing for future generations” | Left Foot Forward

Economics 33 Responses »

Sep 292009

Krugman: balanced budget would be “worst thing for future generations” | Left Foot Forward.

Left Foot Forward picks up on recent Krugman comments:

Last week Left Foot Forward showed how UK business investment was in a state of collapse. The US is suffering the same problem and Nobel prize winner Professor Paul Krugman has written about the necessary policy response on his ‚ÄòConscience of a Liberal’ blog.

Krugman writes:

“Under the kind of conditions we’re now facing, the main determinant of business investment is the state of the economy, as evidenced by the plunge in investment shown in the figure. This, in turn, means that anything that improves the state of the economy, including fiscal stimulus, leads to more investment, and hence raises the economy’s future potential.

“That is, under current conditions deficit spending doesn’t lead to crowding out ‚Äî it leads to crowding in. In fact, you could argue that the worst thing we can do for future generations is NOT to run sufficiently large deficits right now.”

The target: George Osborne. So let’s take another quote about Osborne, from another solid Keynesian, Roberst Skidelsky:

Keynes’s crucial distinction between full employment and subnormal employment was totally ignored by George Osborne in his speech “The Conservative Strategy for Recovery” last week. At no point in his speech did Osborne mention that UK output has fallen by 5pc since last October and unemployment has risen by over one million. The gap between what we can produce and what we do produce has grown to more than £70bn. This is because, as a nation, we are spending £70bn too little.

Almost all that Osborne said is right and sensible in conditions of full employment; most of it is wrong and wrong-headed when there is heavy and persisting unemployment. Although he understands that we have been in the deepest recession since the war, his strategy for recovery assumes that there is nothing to recover from – except a Labour government!

Osborne’s ignorance scares me.

The fetish of the mexdia for cuts scares me as much.

I’ll bespeaking about this on the Labour fringe tonight. 6pm Quaker Meeting House, Brighton, for those interested.