2011 October » Tax Research UK

It’s time to demand St Paul’s open its doors to Occupy London

Economics, Ethics, Uncategorized 19 Responses »

Oct 162011

The ‘occupy’ movement is, I think here to stay. Of course I may be wrong; it may just be a fad that will fade but it doesn’t feel like that to me. It doesn’t feel like that to people like Paul Mason either.

One dimension of this occurred to me last night when hearing from people who had tried to reach the London demonstration, and had been turned back, or had been there and been shocked by the way they had been treated. And all that happened at the foot of the steps outside St Paul’s Cathedral – the cathedral of the City of London. It was that connection that surprised me.

St Paul’s was not, of course, meant to be the focus of the occupation. Perhaps a little unrealistically that was always hoped to be the London Stock Exchange. But like it or not, the focus is now St Paul’s. What’s the relevance of that? Well, I think it raises another serious agenda, wich I would welcome being brought into the open.

I make little of it on this site, but I am a Christian, being both an Anglican and a regular Quaker attender, the latter being overall more telling of my sentiments about faith, as well as explaining my absence of evangelical zeal – Quakers just don’t do such things. But the significance for the current situation is that I do not see role of St Paul’s in the situation in which it finds itself as a neutral one.

The canon chancellor of St Paul’s and regular Thought for the DAy commentator, Reverend Giles Fraser, told the BBC he was happy for people to “exercise their right to protest peacefully” outside the cathedral. But that’s not good enough, I say. I think it was his job to have opened the catherdal to those protesting last night to provide them with shelter and facilities, a place to eat and a secure place away from the risk of harassment in which they could stage their protest and explain it to the world. That’s what places of sanctuary do. But the Cathedral locked its doors.

Fraser didn’t even say he supported what the protesters were doing according to the BBC report, and I am sure they would have quoted him saying so if he had.

And I say he should have done: I say it was his duty to be out there with the protestors. I say it was and is his duty to welcome then into his church. Why? To answer that turn to Luke Chapter 4.18 where Jesus explained the purpose os his mission, about which he said:

The Spirit of the Lord is upon me,
because he has anointed me
to bring good news to the poor.
He has sent me to proclaim release to the captives
and recovery of sight to the blind,
to let the oppressed go free,
to proclaim the year of the Lord’s favour.

For those in doubt about the economic relevance of this the phrase ‘the year of the Lord’s favour’ refers to a Jubilee – a forgiveness of debt that happened in Jewish law every fifty years. How relevant is that for the present time?

Now, I stress, I’m not asking you to believe that statement, or to take action on it. That’s not my style on this issue. But Fraser and the entire church has taken a psotion on this issue. He and it says they believe in Jesus and his mission. I’m asking them to stand by that commitment.

Right now the representatives of the poor and the oppressed are camped outside their door. And St Paul’s is saying that’s OK. Well, it’s not OK. It’s their duty to welcome them in as fellow pilgrims in the ministry of declaring good news for the poor and freedom for the oppressed. It’s time for the church – every church in the UK – to say where it stands on this issue – and declare it has, in the words of the late Rt Rev David Shepherd, ‘A Bias to the Poor‘ ( a phrase that irritated Thatcher so much – as Shepherd intended it should).

And if the church means that is bringing good news to the poor (as I think it both should, and must) and if the faith of those attending those churches is to means anything then it has to welcome those campaigning on its steps into its churches.

That means it has to provide them with shelter when the police attack protestors.

And that ministers have to stand beside protestors if they are under threat of arrest.

And that the church to attest that what is happening in our society is wrong.

And the challenge is especially appropriate not just for the Church of England – the establishment church – which must show that establishment or not its loyalty is to those in need in this country when they are oppressed by that establishment as they are, deliberately, at present -but most especially this is a challenge for St Pauls which now has a duty to turn to its neighbours in the City and say they have done wrong and it is time for them to change their behaviour and make amends.

If the Church of England fails on this now it deserves to be treated as irrelevent. Faith that cannot speak its name; faith that does not deliver on the promise to the poor and faith that cowers from speaking the truth is faith not worth having.

You cannot be a Christian and not take a position. That’s not an option granted to Christians, or their ministers. Giles Fraser cannot be happy with protest by those seeking to defend the poor outside his door but not welcome them in, Not if his preaching on Radio 4 is to have any meaning at all.

It’s time to get off the fence Giles. It’s time to make your church the centre of resistance in the City. Or to admit instead that you’re just running a toursit atracttion. That’s your choice. And there’s only one right answer if you really believe why you wear that dog collar.

So open those doors wide – especially when the police are nearby. It’s your job to provide a place of sanctuary or frankly that building you tend is of no relevance at all and nor is your faith.

It’s time for the establishment church to tell the establishment enough is enough. The time for the poor is now. And for that church to demand action on their behalf.

St Paul’s may not have been planned as the focus of this protest. But as the epitome of establishment power in the City I think it should be. And I hope it will be.

Can Martin Wolf get much more unsubtle and still be polite about the Prime Minister?

Economics 18 Responses »

Oct 142011

Martin Wolf’s column in the FT today is entitled:

Time has come for some intelligent policymaking

It was meant to be rude. As he concluded:

There are two big points here. First, fiscal and monetary policy converge when interest rates are close to zero. The authorities have to co-operate closely, to prevent an unnecessary disaster. As Deng Xiaoping said: “It does not matter if a cat is black or white, so long as it catches mice.” Who cares if a policy is called fiscal or monetary, so long as it works? Second, without economic growth, it is almost impossible to deleverage an economy. The prime minister revels in his pre-Keynesian views. When weak demand is the immediate constraint on output, that is simply terrifying.

And he’s right, the Tories attitude is now simply terrifying. They’re wrecking the country. And still they don’t care.

Keep going Martin. Some of us appreciate what you’re doing.

A gentle riposte to those promoting tax havens – or the answer’s in the ballot box

Secrecy jurisdictions, Tax Havens 16 Responses »

Oct 142011

There have been more responses to Action Aid’s report on the use of tax havens by FTSE 100 companies. One on a site called Shelter Offshore is interesting. Take the conclusion first:

Finally, a suggestion to all those people out there who expend excessive energy attempting to force a moral conscience on big name businesses with subsidiaries in low tax havens – you will never win.

Your voices and actions have absolutely no effect at all. Companies like these have shareholders to whom they are accountable. They will do the least they possibly can to show a seeming willingness for transparency, and they will do the most they possibly can to avoid as much tax as they can get away with.

Instead of fighting an unwinnable war why don’t you put your brand of persistent pressure on your governments to spend all tax revenue responsibly instead, and then and only then will you ever have any leverage to bring big corporates back in from the cold.

Muse on that for a moment and what you’ll see this person (unnamed, of course) is saying is that capital can and will do what it likes and nothing civil society or the polotical process can seek to do about it will stop it doing so. It’s an interesting idea, but what is readily apparent is that first of all he’s saying wealth matters and democracy does not. The only accountability he (I’m sure it’s a he, these things usually are) is concerned about is that to wealth.

And what else is this person saying:

In spite of the fact that the report is well written, interesting, fairly well balanced and very informative, I have been left with a very clear sense of why all those battling to clamp down on offshore centres should actually continue to fail. What’s more, I believe that everyone who can utilise legitimate tax breaks to help them reduce their tax burden should exploit every last one of them. You see, until there’s accountability there should always be tax havens…

I believe that tax is a necessary evil – in theory the tax revenue raised by a nation’s government keeps people out of poverty, it keeps them safe and healthy, it educates them and ensures that those who can contribute to the greater good of society do so for the enhancement of the lives of those who can’t.

However, in the real world tax doesn’t work like that…at least not in all the so-called ‘developed’ nations around the world.

In the UK for example, tax is used to bail out banks, to bail out other nations’ banks, to warmonger, and it is squandered and wasted time and again. In other words, there is absolutely no accountability whatsoever in terms of how the tax revenue raised is spent.

And that he says is because:

The Treasury isn’t run transparently, it isn’t run like a big business with shareholders, it isn’t accountable to anyone.

But hasn’t he noticed something called democracy? Oh, it’s imperfect all right. I accept that. And I also agree government could and should be more accountable. But, democracy is undoubtedly the best form of government yet developed. And perpetually undermining the will of parliament is anti-democratic – as is the whole tone of this piece. That’s because it’s not saying I’ll pay tax because the due process of law says I should. And I’ll pay tax because it’s what’s needed to uphold democracy, capitalism and the whole system of private proieprty. No, it’s saying tax if I want to on my terms for what I want and if I don’t get what I want I’ll try to undermine the system.

This is the 1% – the world’s wealthy - speaking. This is the language of those who call democracy a tyranny because it demands the rich share. It’s the language that threatens us all. It’s the language that says the world’s wealthy demand the overthrow of democracy. It’s the language that leads to the corporate state.

And we will win against it. Because we believe that the answer is in the ballot box. And we’re right to say that. And right is on our side. But it’s not on the side of the 1%. And it’s not on the side of the tax haven abusers. And ultimately I have a very strong belief that right wins. But not, I admit, easily.

For those who say publicity does not work….Google is under tax investigation

Secrecy jurisdictions, Tax avoidance, Tax Havens Comments Off

Oct 142011

Some like to say no tax campaigning works.

I know that’s not true. Real change is happening. But for those in doubt, some long term readers of this blog will know that I have been involved in the tax investigations of Google that have no made that company a notorious tax dodger since their outset. And now Jesse Drucker at Bloomberg (a great journalist with whom I have worked on this issue) reports:

The U.S. Internal Revenue Service is auditing how Google Inc. avoided federal income taxes by shifting profit into offshore subsidiaries, according to a person with knowledge of the matter.

The agency is bringing more than typical scrutiny to how the company valued software rights and other intellectual property it licensed abroad, said the person, who requested anonymity because the audit isn’t public. The IRS has requested information from Google about its offshore deals after three acquisitions, including its $1.65 billion purchase of YouTube, the person said. The transfer overseas of these kinds of rights rights has enabled Google to attribute earnings to foreign units that pay lower taxes, Bloomberg News reported a year ago.

While Google’s potential liability isn’t clear, similar deals between companies and offshore arms are often the subject of disputes over hundreds of millions of dollars in taxes.

Campaigning doesn’t just work. It has the power to hurt pockets. And that’s why so many say it doesn’t work. They’re paid to deflect attention from the fact it’s working, very well.

We are the 99%

Economics Comments Off

Oct 142011

Brilliant.

From here.

And good luck to all those on Wall Street this morning.

Country-by-country reporting seminar, European Parliament, 21 November

Country-by-country Comments Off

Oct 132011

Eurodad and MEPs Sharon Bowles, Antolin Sanchez Presedo and Sven Giegold are glad to invite you to our:

Roundtable: Country-by-country reporting: How financial transparency by multinational companies could contribute to development

Monday 21 November 6-8 PM., Paul Henri Spaak Building, Room P7C050

European Parliament, Brussels

The roundtable will follow the release of the proposed revision to the Transparency and Accounting Directives. This will include EU Country by Country Reporting (CBCR) requirements for the extractive and forestry industries.

The event will also launch Eurodad’s new report “Country-by-country reporting: How financial transparency by multinational companies could contribute to development” which provides examples of tax evasion and aggressive tax avoidance both within and beyond the extractive sector. The report argues that comprehensive reporting is needed and makes concrete proposals for optimal standards to extend beyond the extractive sector.

We invite the panel to not only consider the Commission’s proposal but also seek its views on further progress that could be achieved on country-by-country reporting reflecting on the European Parliament’s statement that “country-by-country reporting is of the utmost importance for extractive industries, but recalls that it would equally be beneficial for investors in all sectors, thereby contributing to good governance globally”.[1]

This event will bring together key people from the Parliament and Commission and Danish Government who will host the EU presidency in 2012 EU at a crucial time for country by country reporting.

Chair Antolín Sánchez Presedo MEP

Speakers

Michel Barnier: European commissioner DG Markt (invited)

Sharon Bowles MEP

A Representative of the Danish Government (Invited)

Richard Murphy: Tax Research UK

Marta Ruiz: Eurodad

The number of places is limited so please register as soon as possible by email only, to amarriage@eurodad.org registration will close on November 11, 2011.

Where do the funds in Jersey come from?

Jersey, Secrecy jurisdictions, Tax avoidance, Tax Havens, Tax justice 1 Response »

Oct 132011

Jersey’s defence to the Action Aid report on tax haven subsidiaries, broadcast on local radio and in the media is threefold.

First, Jersey law has not been broken, so what’s the problem (the same could have been said of those practicing apartheid in South Africa at one time by the way, but let’s not go further).

Second, using Jersey only implies tax avoidance, not evasion. But then, as Denis Healey said, the difference between avoidance and evasion is the thickness of a prison wall and to claim that using an ISA in the UK is the same as routing funds through complex structures in Jersey are the same thing is disingenuous in the extreme.

Thirdly, the world benefits from Jersey, and most especially the UK benefits from all the investment into the UK that comes from Jersey.

The first two are obvious guff (to put it nicely) so let’s look at the third. This argument comes from a US academic called Prof Jim Hines, oft associated with my friends at the Oxford Centre for ~~the non taxation of~~ Business Taxation. What Jim Hines found when undertaking a study was that countries next to tax havens have high rates of inward foreign direct investment and so, he concluded, benefitted from the existence of the neighbouring tax haven. Jersey is using this argument to say that the UK beenfits from its existence.

The trouble with Jim Hines work was that he never asked how the money got into the tax haven in the first place because (and this bit is not rocket science) the cash flowing out of Jersey was obviously not generated in Jersey, it flowed in there in the first place. And where did it flow from (the question Hines did not ask)? Well almost certainly from their nearest neighbouring large economy, of course. Where else?

So where does all the money flowing into the UK from Jersey come from? Why, the UK, most likely. And why does it go through Jersey on its way from the UK to the UK? To avoid tax, of course (re which, see above). In which case it costs us, and does not benefit us.

So would Jersey now like to stop making such fatuous claims? Because they’re really not worthy of any government or quasi-government spokesperson who wishes to be taken seriously.

Cayman doesn’t get the paradox

Cayman 2 Responses »

Oct 132011

Cayman News Service has reported:

Industry professionals have claimed that Cayman’s recent placing as the world’s top Specialised Financial Centre in The Banker’s 2011 Ranking of Financial Centres for the third year in a row shows Cayman’s true stance in the global financial arena. This top ranking falls against a different high ranking on the Tax Justice Network’s financial secrecy index where Cayman came in as the second most secret jurisdiction in the world. “The Tax Justice Network thinks we are a loser and the international banking community thinks we are a winner – I think we all know whose opinion matters the most,” Don Seymour, managing director with dms Management Ltd said.

In the industry magazine’s list, the Cayman Islands beat its second place competitor Guernsey by a clear 8 points, while Cyprus was in third place, Jersey fourth and the Bahamas fifth.

Cayman Finance Chairman Richard Coles congratulated Cayman’s financial services industry for the achievement.

I really find this reporting quite amazing. Don’t they realise that the reports are in their own quite different ways assessing the same things? And that TJN is simple saying that what the bankers think is so fantastic is the secrecy that is so precisely placing a cost on the rest of the world in terms of tax lost, corruption facilitated, harm to real business done and gross financial instability threatening the well being of developed and developing countries alike?

Sure they can celebrate one of these awards. But of they do they have to celebrate the other too. Bbecasue both say Cayman is fantatstic at selling the abuse offshore banking has transforemd into a product.

What’s wrong with the economy in two graphs

Uncategorized 13 Responses »

Oct 132011

OK this is US data, but the US is very like the UK in this respect:

Corporate profits just hit another all-time high.

Image: St. Louis Fed

Corporate profits as a percent of the economy are near a record all-time high. With the exception of a brief happy period in 2007 (just before the crash), profits are higher than they’ve been since the 1950s. And they are VASTLY higher than they’ve been for most of the intervening half-century.

Image: St. Louis Fed