Blogging on my phone is something I have never been keen on. But due to flight restrictions I have no choice this morning - iPads and computers are not allowed in the cabin on flights from Beirut to London.
That means I will be brief. The hour of the morning just encourages that.
Yesterday was, in many ways, very busy. It also seemed to go well. The presentation I gave and the ideas in it seemed to resonate with at least some of those present. That is the best you can hope for at such an event.
In the Q&A I was asked about my thoughts on the success, or otherwise of the OECD's Base Erosion and Profit Shifting project. I suggested that the greatest success from this was country-by-country reporting. I can, of course, be accused of bias, but I think the OECD agrees. In that case there are, however, two issues.
The first is that CBCR is being done in secret. And as I pointed out, you cannot be accountable for tax in secret. That is impossible.
Second was something I mentioned on the blog on Wednesday, and that is that notable absentees from this event and others like it were the Big 4 accountants. No one seems to see them as part of the solution to illicit financial flows because, as I pointed out to this meeting, that is because they are part of the problem. They are not at such discussions because they are instead, as I my research with Saila Stausholm has pointed out, they are in tax havens.
There was universal agreement at this meeting that even if tax havens did not create illicit financial flows they would be much lower without them. And the whole architecture and commercial underpinning of those places is provided by the Big 4, without whom they would collapse, because no bank could be there if they were not also present. So, the Big 4 are the facilitators of illicit financial flows, without a doubt. And for that they need to be made culpable.
NB: This was written at 3am UK time but I have only just got to an internet connection to publish it.
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It’s surprising how radical this material gets so quickly when we consider its (fortuitous) lack of, say, such as critical theory jargon. I guess trading blocks and the WTO have to get to grips with extra-democratic forces like the Big Four.
What about the small accountants and illicit financial flows too. You mentioned extensively in Beirut that IFFs can be internal, especially in tax evasion and fraud.
Examples:
In outer West London a letting agent typically wants to see evidence of a 35k income before considering you. No problem as there are accountants who will give you this ‘evidence’. The tenant then secures a dwelling and makes a housing benefit claim based on income of 12k, and backed up with ‘evidence’ from the very same accountant. This is a real problem for non-accountancy staff in councils to determine which set of books has been cooked and which is real.
Or the amount of personal expenditure being put through accounts as business expenses.
If you know it report it to their Institute and HMRC
“you cannot be accountable for tax in secret. That is impossible”
It is not in secret. It is being reported to tax authorities who have the expertise and resources to properly interpret it.
Why should it be shown to you and I?
You won’t share your tax details with anyone. Why should anyone be expected to share theirs with you?
With respect, that’s akin to saying we do not need accounts and that the risk inherent within them is of no interest to shareholders and many others in society
I think that debate has been resolved
Or are you trying to say something else?
And please recall CBCR is much more than tax data
Having started preparing the UK cbcr submissions for some of my clients I can honestly say that the format etc we are required to submit it in renders it impossible to interpret. I fear cbcr is not going to be the answer you think it is.
That is a tax standard
Not an accounting standard
No one thinks that a tax standard is the eventual answer
The consumer choice is rarely about not paying tax in any simple way. We’re often avoiding gross overcharging in the ‘official’ system. Battery replacement by stairlift provider £279 – done by ‘Fred’ at £50 with batteries via Ebay at £25. Across 100s of examples one can think of home maintenance insurance that could be subject to taxation, but is way too expensive for most consumers to buy. Various dodges satisfy markets for cheap goods and services, including shoplifting to order. Lovely Uruguayan film on this – ‘The Pope’s Toilet’. In some economies you need to rely on worse than the cowboy builder – you pay quacks because doctors and hospitals are so expensive.
Tax can be levied in other ways than on transactions. As with most bourgeois systems, its all about being able to send the boys round. I have austerity as a tax on the poor and vulnerable similar to the Sherrif of Nottingham looting and burning. Who decided the dues to be paid? People died. My question in this concerns what part of a money-flow system is taxed and by whom? Somewhere, we define the right to gain and hold what we term money ‘globally’ without remembering what actions it allows across systems of differing wealth and how different this makes the definitions of it in these systems. In fuller argument this leads me to doubt any system of taxation and what taxation really is. If skint, not receiving from the circuit and rises in basics surely “tax” that individual and group. As surely as the Sherrif making off with livestock and grain. Bridges were regularly destroyed in the USSR to keep “taxation” by central authority out. The qualitative modelling is not done yet. This is no reason not to get on with something approximate enough – we do this across science all the time.
Approximate enough is very close to something I said in Beirut