I had the following article posted on Comment is Free a few minutes ago:
David Cameron is rolling out the red carpet — for tax avoiders. He said this at the G20 summit in Mexico on Tuesday morning:
"If the French go ahead with a 75% top rate of tax we will roll out the red carpet and welcome more French businesses to Britain and they will pay taxes in Britain and that will pay for our health service, and our schools and everything else."
But hang on a minute. His chancellor said in March, "I regard tax evasion and indeed aggressive tax avoidance as morally repugnant". What's more,Osborne pronounced himself "shocked" at the amount of tax avoidance in the UK. And yet, here's his boss saying the door's open to all and sundry French tax avoiders who want to set up camp in the UK.
Well, let's stand back for a moment, and recognise that actually Cameron can't refuse any French person the right to live in the UK if they so wish. What is more, I have no doubt that these French tax exiles won't literally have a red carpet rolled out for them. As a result Cameron's words are on this occasion, as on so many others, literally meaningless. In that case it is what Cameron's words imply that matters. Let me note a few more of them in that case:
"Every country sets its own tax rates, but I think in a world of global capital, in a world where we're competing with each other, in a world where we want to send a message that we want you to build businesses, grow businesses and invest, I think it's wrong to have completely uncompetitive top rates of tax."
Now that's really interesting, because this is the language of tax havens. It's places like Jersey, Cayman and the British Virgin islands who usually talk the language of tax competition that underpins Cameron's comments.
And, of course, it's tax havens such as Switzerland that exist to roll out the red carpet for tax exiles. They all do it by offering low tax rates — something the UK is also capable of doing through its generous tax residence rules and domicile rules. Perhaps it's no surprise that Philip Stevens of the Financial Times recently quoted a German official saying that the UK opting out of a European banking union would turn us into a "Greater Guernsey". Could it be that with these comments Cameron has confirmed that "tax haven UK" is the new plan that he and George are hatching?
We have to hope not, for a great many reasons. First, just compare this language with the language of the last British prime minister to appear at a G20 — Gordon Brown. In 2009 Brown led the London G20 to unity in fighting the threat of global meltdown, together. Cameron could not be more different: he's already trying to pick over the carcass of France. No doubt he'll do the same for Spain and Italy too, while Greek ship owners have always had a special place in British tax planning with their abuse of our domicile rule.
That domicile rule ensures that all those not born in the UK enjoy favourable tax treatment if they live here. It's an unfair prejudice and socially divisive. What more could you do to show how dedicated the UK is to increasing inequality by helping the wealthiest immigrants get richer while the rest head ever closer to the economic misery of poverty?And we know that house price inequality caused by wealthy immigrants to the south-east and London are making housing inaccessible to the vast majority in those areas.
As for the businesses these tax exiles own, let me assure Cameron that they will stay put in France, because that's where their markets are and in the days of the internet the business owner does not have to live over the shop — something Cameron and Osborne have not yet noticed. So we won't win there. And that's inevitable — look at the world's tax havens and you'll see that nothing but the pretence of money shuffling occurs in those places.
And yet that's what Cameron seems to want for us. And this on the very same day The Times, which has conducted its own investigation into tax avoidance, said:
"The British tax system is unfair. It charges the vast majority of people the basic rate of income tax, and expects them to pay. It asks a minority to pay higher rates of tax, and then invites them to avoid it."
That's right. And The Times has demanded that the tax system be changed. But if Cameron has his way he'll keep all the prejudice, bias, discrimination and abuse in place, and all for the purpose of undermining our international allies and EU partners in their efforts to balance their books and restore economic wellbeing.
Except it's even worse than that. What he's also said is he'll seek to undermine a decision that the people of France have democratically chosen. That's what tax havens do — they hold democracy in contempt. This all bodes ill for equality and for our hopes of diversifying the UK economy away from a finance industry dedicated to servicing transient wealth that holds the long-term residents of the UK in contempt.
All we can say in that case is thanks Dave: at least you've set out your true agenda.
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The Times led today with a front page on tax avoidance with a picture of a comedian who has money in my homeland of Jersey. He has a finger in front of his lips.
I did wonder if Mr. Murdoch has seen that is newspaper is supporting that Murphy chap’s argument?
I don’t suppose any Frenchman, however selfish he/she might be, would actually decide to uproot himself and come and live in this climate simply in order to escape the effects of a marginal 75% tax rate. The French public could rightly say “good riddance” to someone who placed his own culture so low on his list of priorities. Perhaps Cameron would think it OK if the government of Monrovia made a similar gesture to us. We could then pass on not only this horde of unpatriotic Frenchmen – but get rid of some of our bankers at the same time. (If the whole notion had any credibility at all that is). What’s behind this of course is the fury of the conservative party that there is now an effective left wing government in France…
I doubt the Tory Party are particularly fussed about the effective left wing government in France. In fact, Cameron seems to be quite enjoying it, as he obviously thinks it will spell disaster for the French economy and lead to an exodus to London. Whether he is correct or not is beside the point, but it is clear that there is no fury there.
“What he’s also said is he’ll seek to undermine a decision that the people of France have democratically chosen.”
I think this is a pretty weak argument. For the top rate of tax in the UK is also a decision that people have democratically chosen. What you seem to imply is that any decision to have a lower tax rate than other countries must mean we are tax haven. Which is absurd. The French have their tax rate. The UK has ours. The UK is not a tax haven – it cannot afford to be. We are not a country of hundreds of thousands of people that is so tiny geographically it has no need for any significant infrastructure – we have an extremely dense (and quite high) population which needs significant government tax revenues.
It is also silly to accuse governments which do not support your measures of necessarily wanting to bring despair and misery to its competitors. It is also anti-democratic, ironically. I am reminded of the Dignitas centre in Switzerland – one of the very few countries in the West which allows people to assist a suicide. Does this mean Switzerland is trying to shaft everybody’s else’s Parliament’s intentions? Of course not.
It appears that, in effect, you just want a high-tax government cartel. Thus any government that might think that is not beneficial economically is on the side of “tax avoiders”. The power to set a country’s tax rates is fundamental to a democracy. And the UK which still has a top rate of 45%, is so far from the 0% income tax rates of some that any talk of it being a tax haven is nonsense.
Respectfully – you ignore the complex realities that make the UK a tax haven
And that’s only the beginning of weaknesses in your argument
Personally I find the domicile rule pretty repulsive.Then again,(it is alleged) a certain wealthy UK individual has all his assets placed in his wifes name,and with her being a Monaco resident,I guess his tax bill is minimal?
So,does any EU country tax as normal it`s citizens-regardless of their country of residence?
On the other side of the coin for example,would an ordinary Irish national of long residence in the UK be a “tax avoider” ? -as surely his personal taxes and VAT are much higher at home now. I suspect this is the main drift of the comment above. I do take your point otherwise.
Brian
I assume you mean Philip Green. His tax bill is not minimal, as he pays PAYE & Arcadia pays corporation tax on profits.
His wife, the owner of the business, and a South African national, resident in Monaco pays the relevant tax there on dividends from the company she owns.
So – no, PG’s tax bill is ‘normal’. We gave up long ago taxing wives as a subset of their husband.
Respectfully – from the mention of PAYE onwards that’s sophistry
@ Richard Cowan. You say “We are not a country of hundreds of thousands of people that is so tiny geographically it has no need for any significant infrastructure”.
One of Richard Murphy’s constantly emphasized points is the the City is a Tax have “cuckoo” in our national nest, pushing out all the native fledglings in order to secure its survival.
In think the City well qualifies as being “so tiny geographically it has no need for any significant infrastructure” – as any infrastructure is basically piggy-backed on the national infrastructure.
And as regards size of population, well, I just skimmed the FAQ site on the City of London for its electoral roll and election results (see
http://www.cityoflondon.gov.uk/Corporation/LGNL_Services/Council_and_democracy/Councillors_democracy_and_elections/Voting_and_Registration/ElectionsResults.htm)
and come up with the following gem:
“Aldermanic election – Ward of Dowgate
An election was held on 8/9 January 2009 and the results are as follows:
Patricia Anne COLLINS – 18
Alison Jane GOWMAN – 63
Alison Jane GOWMAN was therefore elected as Alderman for the Ward.
Turnout – 31.62%
By-election of a Common Councilman – Ward of Aldgate
An election was held on 11/12 December 2008 and the results are as follows:
Ronel LEHMANN – 59
Hugh Fenton MORRIS – 76
Hugh Fenton MORRIS was therefore elected as Common Councilman for the Ward.
Turnout – 20.33%”
Top vote 63 producing a turnout of 31.62%, and 76 a turn out of 20.33% Crikey! Inhabitants are few and far between in the City – nowhere near thousands!
I don’t really see the point you’re trying to make. The City of London is not detached from the rest of the UK. Companies and individuals pay the same rate of tax and are subject to exactly the same laws of the land whether they are resident in Lerwick or the Square Mile.
Looking at the population of the City is a pretty pointless exercise too. All it proves is that it’s a commercial area, not a residential area.
Please read Treasure Islands
Then open your eyes
Andrew
And who said rotten boroughs no longer exist. It is quite comical in practice how many City firms hand out the rights to vote in City ward elections to their chosen flunkeys. The not so funny aspect of this is that the City sits on large sums of public money and is increasingly getting involved in activities outside its geographical area.
I have always thought that it would be a good idea if a large part of the City’s tax revenues were to be diverted towards the subsidy for public transport – given that the CIty is one of the main beneficiaries from the infrasture which is being for its workers.
Obviously Cameron is engaged in a race to the bottom in respect of taxation and is quite happy for us to be seen as a tax haven Ed Miliband should of course respond to this and state quite clearly where the Labour Party stands on these matters. I doubt very much that we will have any European allies if Cameron continues to adopt his antagonistic lecturing attitude to his European conterparts.
So if a very wealthy Frenchman with a huge income decides that instead of staying in France and paying 75% tax on his high income he will move to Germany and pay around 50%, does that make him a tax avoider? It would seem so. He could move from France to absolutely anywhere in Europe to avoid tax.
The wealthy can always move? Why? Because they can if they want to.
Freedom of movement of capital and of individuals within the EU will always create such opportunities to avoid tax, with or without “tax havens”. Those paying 75% will want to pay 45%. Those paying 45% will want to pay 20%. Those paying 20% generally can’t be bothered to avoid it.
That is why we need a passport tax
I will deal with it tomorrow
I don’t see how a passport tax can possibly work within the EU.
See what I write later today
Look forward to reading about it. How will that work when there is free movement within the Schengen zone?
People are critical of the Greeks (and Italians) as being a race of tax dodgers. But I’m wondering if this cultural mindset was created because the vast majority of people decided that if the elite can get away with it, why can’t they? If that’s the case, then do anglo-celtic countries (U.K., Australia, NZ) face a similar future if our stupid politicians continue with this course?
Historically, Anglo-celtic people have a strong legal tradition that many other developing nations don’t; corruption has been frowned upon. But if we allow this ‘cancer’ to develop then perhaps that good-will in our populations will be eroded too.
The cancer is spreading
It’s being spread by the tax profession
And what exactly do you mean by the tax profession? You bandy this phrase around fairly loosely. So who form part of the tax profession.
Those who sell tax services
Accountants and lawyers who scrutinise the legislation looking for ways to avoid paying tax. They are very expensive. Some of the best brains in the country are engaged in this entirely unproductive activity.
There is a solution but Richard doesn’t like me to keep talking about it.
Henry
You bleat about it endlessly here
I am remarkably tolerant
Especially given the abuse you heap on me elsewhere
Richard
“Those who sells tax services”, well that probably puts you in that category too. You are paid by the TUC for advising them, is that correct?
So what I would like to know is how you conclude that all who sell tax services are involved in tax avoidance? Or have you simplified this a little too much to suit your argument.
Oh dear – generalities are now unacceptable in debate when shortform communication and heuristic reasoning has to be used
Might I suggest you’re a pedant?
It would certainly seem that way
Tax dodging is not confined to dark-skinned southern Europeans who we all know are congenitally slippery and dishonest. What honest, upright, fair-complexioned Brit has not paid a workman cash-in-hand?
All congenitally dishonest?
Sorry….no
Irony, Richard. But cross your heart – have you never, ever, paid a tradesman cash in hand?
Never
And if I am offered a quote on that basis – and have been – I show them the door
“The British tax system is unfair. It charges the vast majority of people the basic rate of income tax, and expects them to pay. It asks a minority to pay higher rates of tax, and then invites them to avoid it.”
That is what a tax system does when it is purportedly based on “ability to pay”. In reality it is related to inability to pay for the right professional advice. Read what the Australian Chalk Commission said on the subject in the link below to the 18 page summary. There is much more on this subject in the full report, which is essential reading for anyone seriously concerned about the scandal of the tax avoidance industry.
http://www.landvaluetax.org/government-papers/brisbanes-inquiry-into-land-value-rating.html
I just found the following beauty in the HMRC guidance on dual contracts (see http://www.hmrc.gov.uk/menus/dual-contracts.pdf)
“In a spirit of collaborative engagement HMRC asks all employers who utilise dual contract arrangements to implement a retention policy that will retain relevant documents for at least two years from the end of the tax year to which the document relates.”
Dual contracts are of course the mechanism used by many non doms to divert a nice slug of their tax income to somewhere other than the UK or where they are domicilled – and where the individual concerned no doubt performs a lot of their duties – and could doubtless demonstrate that this was the case if they had kept the necessary documents.
Given the HMRC guidance was only issued this year – we might have hoped that they might have progressed from collaborative engagment by now. All this really demonstrates how the UK Government does take the issue of tax avoidance by non doms particularly seriously, even though they clearly know what is happening.
I presume you mean “does not take”?
I’d agree with that
oops – yes