MPs’ sleaze: Byers for sale | Editorial | Comment is free | The Guardian .
I suspect Stephen Byers broke no law when offering his services for sale.
Which is a shame. I’d dearly like to see him prosecuted for what is very obviously corrupt behaviour.
And I hope Labour expels him. He deserves it.
UK must invest its way out of recession | Michael Burke | Comment is free | guardian.co.uk .
Also by Michael Burke this morning:
[A] piece of long-neglected Treasury research is its own “ready-reckoner” – Public finances and the cycle: Treasury economic working paper No 5, November 2008. This estimates two effects on government finances from a change in GDP.
The first is the improvement in tax receipts and the second is the reduction in government spending (lower welfare payments and so on). Taken together the ready-reckoner estimates that for every £1bn improvement in the economy, 75% of that will feed through to an improvement in government finances in the second year. So a £1bn increase in government spending leads to a £1.4bn increase in activity, which produces an improvement in government finances of £1.05bn. This is a positive return, which can be sued either for deficit reduction or further investment.
The argument that the only way out of recession is for the government to spend – precisely because the private sector won’t – is true.
So why not spend – a lot – now?
That’s the real question.
UK must invest its way out of recession | Michael Burke | Comment is free | guardian.co.uk .
Michael Burke in the Guardian:
The latest letter from the EU commission, admonishing the government for its failure to set out a sufficiently bold programme of cuts is a timely reminder that there are strong opponents of fiscal stimulus. This is odd, since almost every industrialised country adopted stimulus measures in 2009. The one exception was the government in Dublin, much admired by the Tory front bench. The admiration seems misplaced: 18 months of spending cuts and tax increases have contributed to the longest and deepest recession in the Euro area. And the policy of “reassuring the financial markets” has been an utter failure even in its own terms. Tax receipts have fallen despite tax rises, and government spending has increased despite deep cuts in both welfare payments and public sector pay. As a consequence, the deficit continues to rise and Irish bond yields have gone from one of the lowest in the Euro area to the second highest, only below Greece.
This is the reality of the EU’s demand – banker driven, of course.
And this is the reality of the Tories demand for cust – banker driven, of course.
And yet the argument for slash and burn will be heard from the Tory front benches this week.
If Alastair Darling has any sense then he’ll create clear red water between his position and that of the Tories.
The choice at the next election should be an easy one – is it putting bankers or people first?
It is as blunt as that.
And there’s only one right answer.
Judge criticises conduct of Portsmouth administrator | Portsmouth – Times Online .
As the Times reports, Andrew Andronikou is administrator of Portsmouth football club.
And in December 2008 during a court hearing it was ruled by a judge that
“Mr Andronikou’s conduct in these proceedings, particularly in relation to evidence filed by him on behalf [of Ahmed and his family], was manifestly inappropriate.” The judge also found that Andronikou “did fail to meet the standard to be expected of a reasonably competent insolvency practitioner”.
Three questions then:
1) Why is he still a partner at Hacker Young?
2) Why is he still licenced as an insolvency practitioner?
3) Why did the court not block his appointment at Portsmouth?
Sorry – but if I’d had such a ruling against me I’d expect all three questions to have been asked.
And so should society at large.
FT.com / Global Economy – Tax haven drive will mean greater scrutiny.
The FT notes:
The international drive to prise open tax havens could expose businesses to greater scrutiny as a result of a little-noticed feature of hundreds of new deals aimed at tracking down tax evaders.
Jeffrey Owens, director of the centre for tax policy and administration at the Paris-based Organisation for Economic Co-operation and Development, said the ability to request details about companies was “an important aspect” of the agreements on tax information exchange that have proliferated in recent months.
He said: “I think the world is in the process of changing. It will have a big impact on corporations and high net worth individuals.”
That’s true.
But as the FT notes:
Over the past year, campaign groups have succeeded in persuading the OECD to consider new guidelines on transparency after claiming that transfer pricing abuses allow companies to divert revenues from developing countries to tax havens.
This may have an even bigger impact!
Lloyds accused of avoiding tax to artificially boost profits | Business | guardian.co.uk .
The Guardian reports;
A former employee of Lloyds Banking Group has accused the bank of artificially inflating its profits by almost £1bn through the use of aggressive tax-avoidance schemes and exotic “Lehman- style” offshore deals which he said amounted to false accounting.
The former senior tax manager at the bank told an employment tribunal Lloyds was involved in running battles with Revenue & Customs after it embarked on a hostile relationship with the tax authority over multimillion-pound corporation tax bills while involved in extensive manipulation of the way it accounted for unpaid taxes.
Between 2005 and 2007, he said, the bank insisted that finance staff devise ever more elaborate ways to depress a growing tax bill, many of them involving the now collapsed Lehman Brothers and the discredited financial products division of AIG, the American insurer that cost the US government $80bn to rescue. By 2007, the bank was excluding more than £900m of potential tax in its accounts, allowing it to inflate profits by the same amount.
They continue:
The bank’s former head of tax compliance, Andrew Constantine, told the employment tribunal that Lloyds refused to listen to staff who voiced concerns about the tactics adopted by the finance department, or institute reforms that would put its finances on a legal footing.
For three years he made representations to board members that the tax planning adopted by the bank was unethical and amounted to false accounting. He also warned that a breakdown in the relationship with HMRC would damage the bank and lead to even higher tax bills.
As for Lloyds it said:
Lloyds said it did not dispute that Constantine told senior executives of his deep misgivings. It said: “Mr Constantine’s allegations about the Group’s tax planning were fully investigated and found to be without merit. The Group maintains an open and transparent dialogue with HM Revenue & Customs. We have made adequate provisions for all our tax liabilities.
“Like any organisation, we will seek to reduce tax impact where it is practical and appropriate but we always comply with all aspects of tax regulations in all the jurisdictions within which we operate.”
I know Andrew Constantine. I have, I admit, discussed this situation with him.
I think he’s a good, honest and ethical tax accountant – not words I readily strong together too often.
And as the Guardian notes – Lloyds’ tax history is not great.
I have no doubt who I am backing to win.
But the law can be an ass.
It was good to be challenged about why we need much greater financial transparency to help developing countries by the IMF during an extended meeting with them on Friday.
The team from the Task Force on Financial Integrity and Economic Development was able to address these issues, and clearly make the case. A number of explanations were offered.
First, greater transparency in developing countries will be of benefit in those places. Without data markets cannot operate effectively. If you do not know with whom you are dealing; if you do not know how they are using resources; if you cannot be sure entities can meet the claims made against them; if you cannot even be sure how you can register that claim, then quite clearly there is a significant risk premium within those markets that increases the cost of capital in those places. There is also substantial risk of the misallocation of resources, reducing the rate of return on capital, which has the same effective consequence. That means the cost of doing business in developing counties is significantly increased without full and open disclosure of what all entities other than natural persons are undertaking in these places.
Second, the maintenance of effective systems of regulation to prevent bribery and corruption, crime and the abuse of tax systems through transfer mispricing is not and cannot be claimed to be an internal matter which developing countries alone can tackle. When there are states around the world – the 60 or more secrecy jurisdictions that we know exist – offer facilities that are deliberately designed to undermine the effectiveness of the law enforcement agencies in these places then quite clearly they face an almost insurmountable issue in tackling the problems they face internally with the scarce resources that they have available to them. This means solving the problem of illicit financial flows cannot and never will be a matter for the developing counties of the world to tackle in isolation, and individually.
Third, this problem of secrecy jurisdictions is not a problem the developing countries of the world created. It is one we in the developed world created, and from which they suffer, along with us. We created the limited liability corporation. It has been useful, and nothing will now make it go away. But we also allowed it to be debased, to became opaque to the point we know little or nothing about most of the world’s corporations – even to the extent of not knowing where some of them are incorporated, or if they even exist on registers anywhere. We allowed that to happen. We provided the space for that to happen. We do at present continue to tolerate that happening. This is a problem we must tackle or law enforcement in developing countries (and our own) will be continually undermined.
Fourth, we have allowed the secrecy space that the combination of multinational corporation group accounts and secrecy jurisdictions in combination provide and which between them enable the whole process of transfer mispricing to occur – to far too great a degree undetected.
Without a doubt there is a problem of law enforcement in some developing countries. It would be entirely wrong to deny it. But to say that this is their problem to solve alone and that we have no duty to reform the requirements of the international financial system to improve its efficiency as a mechanism for allocating resources, for enforcing property rights, for preventing bribery and corruption , for preventing crime and for preventing tax abuse is just wrong.
The Robin Hood Tax Campaign has published its Budget Submission to HM Treasury. Readers of this blog might recognise the writing style.
The submission says:
The Budget debate provides the opportunity for all political parties to show their support for the Robin Hood Tax, not just on an ideal international level but starting here and now in the UK with a unilateral sterling CTT.
Without new sources of government revenue, cuts will hit vital public services, poverty relief, prevent the world fulfilling the Millennium Development Goals and reduce funding available to tackle climate change.
The Robin Hood Tax can also be part of the policy response to the economic crisis by helping reduce irresponsible banking and putting pressure on bank bonus pay – outs. Unlike other proposals for tax increases such as a rise in VAT, the Robin Hood Tax is progressive and falls on those who not only can afford to pay it, but bear a large share of the responsibility for the downturn.
Robin Hood Taxes can deliver on these issues. Now is the time to commit the UK to such taxes.
As the submission also says:
We are quite realistic: Robin Hood Taxes won’t solve all the world’s problems by themselves. They can’t.
Of course that is true, but it does not undermine the argument that we need action now to tackle the problems we face – and new taxes on irresponsible banking are part of that solution.
It will be interesting to see if any commitment is made.
A new report released today from Global Financial Integrity (GFI) on private, non-resident deposits in secrecy jurisdictions finds that the United States, United Kingdom, and the Cayman Islands are the most popular destinations for financial deposits by non-residents. Switzerland, Luxembourg, and Hong Kong also make the top 10 list of destinations.
"This report looks at deposits held offshore by private entities on a country-by-country basis, achieving a level of specificity previously unavailable to the public," explained GFI director Raymond Baker. "With overall deposits in secrecy jurisdictions currently approaching US$10 trillion, this report measures a sizable chunk of global wealth and helps us to better understand where individuals and corporations are putting their money."
Privately Held, Non-Resident Deposits in Secrecy Jurisdictions analyzes data from the Bank of International Settlements and the International Monetary Fund to measure total deposits by non-residents in areas considered secrecy jurisdictions under the definition established by the Tax Justice Network.
Notable report findings include:
The report also contains two case studies of Switzerland and Iceland, which show measurable fluctuations in financial deposits correlated to events in which financial secrecy or overall market solvency were threatened.
"This report shows that offshore deposits are on the rise, and the quantities of money being sent into these jurisdictions are massive," said Mr. Baker. "The report also helps us to better understand where reporting may be improved to better differentiate between licit deposits and illicit deposits, which will ultimately enable better law enforcement in cases of tax evasion and other financial crimes."
Privately Held, Non-Resident Deposits in Secrecy Jurisdictions is the second report by GFI economist Ann Hollingshead. Her earlier report, Implied Tax Revenue Loss from Trade Mispricing, was released last month. Click here to download a copy of Privately Held, Non-Resident Deposits in Secrecy Jurisdictions, click here to download a copy of Implied Tax Revenue Loss from Trade Mispricing
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