The good news continues.
The Ile-de-France (which is dominated by Paris) has declared itself a “tax haven free zone”.
Congratulations to Tax Justice Network colleagues in France who are behind this.
Paris: a tax haven free zone
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Jun 182010
Secrecy jurisdictions: the good news keep on coming: Switzerland is broken
Secrecy jurisdictions
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Jun 182010
Switzerland’s banking secrecy has been broken – without a referendum:
Swiss lawmakers on Thursday gave final approval to a treaty with the United States that will hand Washington thousands of files on suspected tax cheats, agreeing to drop plans to allow a referendum on the issue.
It’s been a good week for the opponents of secrecy jurisdictions as around the world their secrecy begins to collapse and their business model begins to fail.
I might just open a bottle tonight to quietly celebrate.
I am aware that some think I can be colourful in my description of the ConDems. But I have been enormously overshadowed this morning by no less a person that Samuel Brittan – hardly your archetypal radical. Writing in the FT he says:
David Cameron and George Osborne are behaving like owners of a whelk stall rather than economic managers of a nation with its own currency.
He by and large leaves the reader to work out why, but his reasoning is obvious. The UK is not a company, it’s a country. So it can influence its level of demand: a whelk stall can’t. It has its own currency, so it’s not Greece, because if you have your own currency you can’t default. It has its own central bank, from whom it can borrow endlessly, if it wishes. And he implies it should.
So, as he concludes:
We could live with an old-time religion Conservative Budget if the rest of the world stayed with sensible demand management. The real harm is that the British government has tipped the balance in favour of ill-timed financial austerity at gatherings such as the Group of 20. Even then there is some hope that the more pragmatic German and French leaders may make their austerity a matter of words more than deeds. And all is not lost so long as the Obama administration and China’s leaders stick to quasi-Keynesian policies.
The big guns are lining up to say the Tories have their policies hopelessly wrong. And still they’ll battle on. Which is why, no doubt, Brittan entitled his piece:
Are these hardships necessary?
I think the answer is self evident.
Jun 172010
There was a debate in parliament yesterday on tax avoidance. In it the following comments were exchanged:
Ms Eagle (Labour, ex Treasury minister): We also persuaded the OECD to develop best practice guidelines on country-by-country reporting, as was also mentioned earlier-an excellent initiative that was put on the agenda by the development community, and in particular Christian Aid, ActionAid and Oxfam. Tax evasion costs developing countries billions of pounds each year in lost revenues, and is a barrier to social and economic development and growth.
Mr Gauke (Conservative, current Treasury minister): I would say that there is something there for us to build on, and I think that that probably answers that question as effectively as I can.
The hon. Lady highlighted the issue of country-by-country reporting. Our view is that we certainly want to do everything we can to help developing countries to improve their ability to collect tax. The OECD informal taskforce on tax and development is currently exploring with non-governmental organisations and with industry whether country-by-country reporting would be effective in improving tax transparency. We shall certainly consider this matter very carefully to see what is the most effective way of doing things.
There is also something that the previous Government achieved, which the hon. Lady did not particularly mention but for which I think they deserve some credit, in ensuring that the tax capacity of developing countries can be improved. Again, we are certainly very interested to see what we can do to explore that issue.
It’s true, Labour did sterling work on this issue.
I’d like to hope one day I can say the same of the Conservatives.
The fact that the minister does not relate country-by-country reporting to ensuring that the tax capacity of developing countries to raise tax is enhanced is, however, worrying.
I sense the need for a meeting.
Gibraltar is the next secrecy jurisdiction to succumb to pressure to reform. As reported today:
GIBRALTAR: The government of Gibraltar said on Wednesday it would end its tax-free offshore status for companies based in the British territory as of January as it seeks to dispel its reputation as a tax haven.
Currently, the tax regime in the tiny enclave off southern Spain makes a distinction between “onshore” companies, which pay corporate taxes, and “offshore” companies, which are exempt.
But under the new tax code that comes into effect next year all companies will be required to pay corporate taxes although the rate will be slashed to 10 percent from 22 percent currently.
The ring fence has been smashed.
And I bet this: Gibraltar’s income will tumble. Another secrecy jurisdiction will be biting the dust soon. Fair tax kills these places, as I always knew it would.
Jun 172010
I did not hear all of Mervyn King’s speech last night at the Mansion House. But I heard “asset sales” i.e. an end to quantitative easing and I heard “rate rises”.
And between those two lines I heard something else: “business as normal will be resumed as soon as possible”.
But that would be the City’s view of business as normal.
It’s not the view that says low long term interest rates are vital.
And that unemployment is central to economic policy as we go forward.
No, the rue of "sound money” over all else was coming out loud and clear.
Have we learned nothing?
Have we not appreciated that right now money is the least of our problems? And that deflation remains much more likely than inflation anyway.
Apparently not. And that’s why giving the Bank of England more powers worries me, a lot.
Now tell me country-by-country reporting in the extractive industries does not matter
Country-by-country
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Jun 162010
As the FT notes:
BP on Wednesday reached a preliminary agreement with the Obama administration to set aside $20bn to cover claims relating to the Gulf of Mexico oil spill, person with knowledge of the negotiations said.
Now tell me country-by-country reporting in the extractive industries does not matter.
As Simon Jenkins in the Guardian asks:
Why is there no economist royal, to shoot in time of trouble? We need someone to tell us clearly whether George Osborne, in next week’s budget, is going to save the economy or ruin it. The hawks and doves cannot both be true. The first say the chancellor will slash public spending, restore Britain’s financial credit and secure swift economic recovery. The second say he will slash public spending, increase unemployment, cut demand and wreck economic recovery. Is the difference political or intellectual? Someone must know.
Let me assure you Simon the difference is not economics, it’s purely politics
No economics can justify the position the deficit hawks, or even the deficit doves are taking.
I can assure you then it’s purely politics, and a very nasty politics at that. If you doubt me look at what Tory think tank Reform has written today (report from Reuters):
U.K. Chancellor of the Exchequer George Osborne should cut funding for health, education and jobless benefits and reduce taxes for the rich in his emergency budget next week, the Reform research institute said.
Reform, which includes lawmakers on its advisory board from both the Conservative and Liberal Democrat parties that make up the U.K.’s governing coalition, said the chancellor should also increase sales tax on children’s clothes and food while means- testing or cutting benefits for families and the elderly.
“Tackling the deficit will be an undeniably painful process given the size of the deficit, the inefficiency of the public sector and the overreach of the government,” Andrew Haldenby, Reform’s director, said in an e-mailed statement. “The pain should be shared across society.”
Their aim: £20bn out of health, £13bn out of benefits and VAT increases – including on items where the impact is bound to be very heavily on the poorest in the community. All matched by tax cuts for the best off.
This is not about sharing pain – pain the poorest did not create. This is about using using a crisis created by the greed of the wealthiest to role back the state and capture more of its income for those with wealth.
This is ugly class politics.
And this is about undermining the state.
Oh, and it’s about the economics of ignorance if it’s not: an ignorance of economics that is unimaginable if they really do genuinely hold the view that what they do will cut the deficit.
Jun 162010
As the FT notes:
German investor confidence plunged this month at the steepest rate since the collapse of Lehman Brothers in late 2008 as Europe’s largest economy was hit by fears over the eurozone debt crisis, the FT reports.. The Mannheim-based ZEW institute said its economic sentiment indicator dropped by 17.1 points in June taking the index to its lowest level since April last year.
As I noted yesterday, the deficit hawks claim that:
at lower levels of public spending the economy is likely to grow faster. If the economy grows faster, then wages will grow faster. So households today will feel safe to borrow and consume more and to save less, knowing that their (pre-tax) incomes will be higher later, allowing them to pay off their debts. Investors will also expect better returns if growth is faster.
And this report shows that the more cuts are offered he more the reverse is true. The reality is investors will not invest when cuts are happening. And consumers will not consume either.
The hawks are wrong.
