Tax havens are in the news, again. Once more we learn that the rich, famous and those with the means to buy secrecy about the things they'd rather the world did not know about have found lawyers, bankers and accountants to service their needs in those murky places commonly called tax havens.
The focus of what will be said over the next few days will be on who did what, where, with what consequence. That's the way our media works. But the real questions are systemic, and are what really happens, who makes it happen, why does it happen, what is the cost and (most importantly) what can be done about it? These are all issues to which I have given a lot of attention over many years, including creating one of the most widely promoted solutions, which is country-by-country reporting.
If you want to know the narrative of tax havens - and the stories behind them - then Nick Shaxson's 'Treasure Islands' is the best book on the issue. If the policy issues are your concern might I instead suggest my book 'Dirty Secrets: How Tax Havens Destroy the Economy'?
The book is published by Verso and right up to date. And as with all my work, the focus is very much on what to do to solve the problems I identify. It's a journalist's job to do the shock horror. It's always been mine to suggest how to put things right. And that's what I devote much of 'Dirty Secrets' to, unlike any other book on the subject.
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Yes, why not plug your Book whilst the media salivates over the cherry picked findings taken from a load of stolen documents. Funny how you cannot condemn the criminal way this information was obtained.
Have I condoned it?
You have evidence that the disclosures were illegal? I haven’t seen it.
Have you see the evidence that they were legal?
I have not seen it
I for one condone the way the information was obtained. In fact I celebrate it and hope more of the same will come. I do so because the crime preventing agencies that we usually expect to stop crime have in practice let tax evasion criminality run rampant, in practice a no go zone for national and international law enforcement. It is only good and proper that conscientious citizens step up and disclose the information needed for criminal investigations to proceed.
Hear Hear.
James says:
November 6 2017 at 7:40 am
“Yes, why not plug your Book whilst the media salivates over the cherry picked findings taken from a load of stolen documents. Funny how you cannot condemn the criminal way this information was obtained.”
Given the way the ‘security industry obtains and uses information for its own purposes (which have nothing whatever in most cases to do with democratic governance) I think it rather pathetic to cry ‘foul’.
Your defence of probity where there is none reads as toadying to powerful interests which do not need or deserve any respect.
The biter bit. I would say.
And…………”The quality of nothing hath not such need to hide itself.”
FWIW I heartily endorse those recommendations.
Flattery aside, I remember in the aftermath of the Panama Papers there was quite a lot of comment predicting that, due to the particular media institution to which the documents had been shared, that the likelihood of exposure of serious Establishment figures in the US, UK and EU would be unlikely.
At the time a criticism of this view was that any apparent under-representation of the US and UK individuals would be due to them using other havens to shield their actions.
Does this remain the case for the Paradise Papers?
The Queen aside, it seems that the headlines so far seem quite similar – one ‘usual suspect’ (Lord Ashcroft) and some not-yet-completely-specified links with the dastardly Russians (the Panama Papers led with a lot of talk of Putin linked entities).
The Queen’s interest is of course newsworthy, but will be dismissed as a problem with her advisers.
I fear this will be another ‘tipping-point’ that won’t actually affect anyone’s balance in the long run.
I did not have access to the papers and am most interested in systemic risk so I do not know
Almost every day, if not every other day when I wander the net and deal with mails I am confronted with information that the site has had an upgrade. No matter whether the previous one was simple and easy etc. you have to get the latest whizz bang tech to stay with it. Some of them are very complicated. But what they tell me is that everything out there is now bigger, more complex and can do much more and faster. So the rich who want to move and hold their money in other places now are probably streets ahead of the capability of the slower moving tax authorities, never mind legislation or regulation. That is if the authorities want to regulate. In this world few of them do for obvious reasons. If a tsunami hits Nauru or The Caymans it could get very interesting. The nasty bit is that if you want to raise tax the old ways are no good. You will have to start taxing property effectively, food, furniture and household goods, vehicles and things that can be be seen and counted. If you do not then you might have to scrap the NHS and pensions.
You do note need tax to pay for the NHS or pensions. It’s spend and tax not the other way around.
See, e.g.
http://bilbo.economicoutlook.net/blog/?p=9281
Tax is only needed to
1. Prevent inflation.
2. Stabilise the distribution of wealth and income, and prevent state capture.
3. Priorities productive economic activities and penalise negative externalities.
4. Diverts funds into infrastructure investment.
Precisely
The queen technically dosent pay tax albeit she voluntarily pays it so if tvhats the best revelation from this data dump then it dosent seem hugely interesting?
You wholly miss the point
This is not just about tax
It’s about secrecy – to let the Queen invest in dodgy loan sharks, for example
Tax havens undermine all the conditions for efficient markets. How can anyone on the right defend them?
Quite right. The secrecy covers a multitude of sins, and outright criminality, from government corruption to the laundering of income from illegal drug operations, and everything in between.
.
What we must ask is why, given that we know secrecy allows and encourages illicit tax evasion, those with nothing to hide, but are merely taking advantage of legal “tax avoidance” are so coy about protecting their identities, and their legal activities. If I were cynical, I might conclude that at best they are not proud of their tax avoidance, in which case public shaming might result in a higher tax take. At worst I might suspect they really do have something to hide, and we have a duty to stop that.
The Queen is actually the Head of State in Bermuda. Are you saying that she should not invest in her own country? She may have a small holding (£3,000) in a company of which she is unaware which has been fined by the UK government. But we are hearing about this through the sanctimonious mouthpiece of the BBC whose £12.9 billion pension fund holds £2.194 billion in offshore equity funds, holding shares in Google (fined EUR 2.4 billion by the EU) and Amazon (fined EUR 294 million).
The BBC is not my concern
And yes I am saying she should not hold funds in places that bring her into disrepute, as they clearly have done
It’s really not hard to work out, is it?
‘The Queen technically does not pay tax…so it’s not hugely interesting’ that the Duchy which provides a chunk of her revenue doesn’t bother to either??!!
I beg to differ…indeed would respectfully point out that such things ARE historically hugely interesting. Some people get so interested in the behaviour of their monarchs that they remove their heads… especially at times when some of them can’t afford bread (see-foodbanks).
Perhaps we should just drop the ‘M’ from HMRC ?
Its a disgrace how Panorama have used pilfered documents to expose peoples private affairs.
What people do with their money is their business.
No it is not their business
Their duty if they use structures created by law is to be accountable for their use, and they are not
Sometimes (it’s rare, but happens) the law has to be broken to create change
After all, much law is made by those who have everything to lose and many to oppress, and that is true here
That was a joke, right?
It’s not their money though. Money is only loaned into the economy for the purposes of facilitating trade.
If you hide money you prevent it from fulfilling its intended purpose and damage the rest of the economy in the process.
Spot on – free movement of capital? (which as someone pointed out in a learned critique meant that countries lost their ability to tax…and certainly lost their ability to tax those with large amounts of it who have the wherewithal to shift it).
Right wing drivel, on many levels.
1) Secrecy jurisdictions enable criminals and the corrupt to hide their ill gotten gains away from law enforcement authorities as well as tax authorities. Many dictators and corrupt elected politicians who’ve pilfered their own countries’ resources have done just this. How they got their money is very much other people’s business.
2) All the evidence is that these jurisdictions are overwhelmingly used by the super rich to avoid paying tax which the rest of those in the societies they made their money in cannot avoid paying; or, even worse, are made to pay more tax by governments to make up for the shortfall in tax collected. How they’ve avoided paying their fair share is everybody else’s business.
3) The societies where the super rich have made their money usually have physical and administrative infrastructures set up by the governments or citizens of those countries; part of the way these are provided is through taxation. Why should the richest be able to make money in these places but not pay for their upkeep? The ‘freeloader’ and ‘parasite’ come to mind. The fact they can prevent ‘their’ money being properly taxed is other people’s business.
4) It’s now widely acknowledged by organisations such as the IMF and UN, that widening levels of inequality harm economic growth and the efficient working of markets. Hence these secrecy jurisdictions harm capitalism itself, and therefore, in the medium/long run, those who use them.
This is apart from the very real damage done to societies by ever increasing inequality as the resentment and anger of those at the bottom fuels extremist politics, eagerly exploited by unscrupulous nationalist politicians – where do you think Trump, Putin and the Brexit come from?
Or are you a typical Social Darwinian libertarian idiot who wants a society where all the wealth goes to a few lucky/ruthless/unscrupulous people while the rest of us live lives that are nasty, brutish and short?
[…] of modern captialism: they are one of the main ones on which it is built, as I argue in ‘Dirty Secrets’. But let’s not pretend for a minute that they have any proper role to play in free […]
I agree with the point about systems. The media will naturally focus on the most prominent people and call their character into question. This is of far less importance than the systems that allowed them to carry on in this way. It was the same with corporate governance/employment practices. We were invited to consider why Phillip Green and Mike Ashley were nasty people rather than considering overall causes and remedies. In some instances this seems like a deliberate ploy – better to get the “plebs” to rage at a few individuals than risk them trying to get behind changing the system.
I am not terribly interested in the people
I am interested in the system
And maybe the firms that maintain it
I was amused/annoyed at the justification given for tax havens a couple of times on the BBC last night – that if they didn’t exist there would be “no limit on the taxes that governments could levy”. The clear implication being that rich individuals/corporations are above the law/should be trusted themselves to specify how much tax they should pay.
Try driving a car with false number plates in the UK because “otherwise there would be no limit to the fines that the government can levy when I break the speed limit; it’s OK because I know that I can safely drive at 100 mph”. I’m just guessing that the police wouldn’t be very sympathetic!
It’s a sick claim that shows no respect for democracy or the law at all
But then those who make it do usually hold democracy in contempt
I see the BBC as increasingly a part of the problem.
I’m not sure, but I think that whirring noise I have been dismissing as tinnitus is perhaps Lord Reith spinning in his grave.
Like the Owen Jones quote!
[…] pillars of modern captialism: they are one of the main ones on which it is built, as I argue in ‘Dirty Secrets’. But let’s not pretend for a minute that they have any proper role to play in free […]
I understand the objections to criminality in the provenance of this data; and there is, indeed, a point to laws that forbid our governments trawling through everything we record in the hope of formulating suspicions they can prosecute – “Give me six lines from the most virtuous man…”
However, the loudest objectors would do well to consider that there is contract, and no duty of confidentiality, that binds a bank or a financial intermediary to silence about a crime committed by their clients; let alone facilitated by their own offices.
Are we so very, very sure that this isn’t an ‘inside job’ ?
Some of those payments to the princes of Trump’s kingdom come from a named individual in the sanctions list for Russian oligarchs and Putin’s inner circle. That’s sanction-busting, it’s a criminal offence and it carries jail time.
Those sanctions aren’t ‘just politics’, they were always about crime and they were given teeth following a very high-profile murder.
Are you so very, very sure that this should all stay under wraps – or that the disclosures are actually illegal?
Governments acting as agents for their populations have little excuse, or justification for hiding their dealings behind a cloak of secrecy. It is generally an abuse of power. (There may be rare occasions when it is appropriate, but we no longer trust the discretion of the political classes)
Since governments have increasingly sown distrust they must reap the whirlwind of the people’s suspicion and contempt.
Inadvertently the Deputy Prime Minister of Bermuda summed things up on Panorama when challenged about transparency – or the lack of it – telling the BBC reporter that he didn’t matter.
This is the attitude that is the most infuriates – that we (the little people) shouldn’t busy our poor little heads about the doings of our betters and that fairness had no part to play in this game.
Only the little people pay tax, eh?