{"id":33178,"date":"2016-04-14T06:27:46","date_gmt":"2016-04-14T05:27:46","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=33178"},"modified":"2016-04-14T06:27:47","modified_gmt":"2016-04-14T05:27:47","slug":"tax-competition-2","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2016\/04\/14\/tax-competition-2\/","title":{"rendered":"Tax competition"},"content":{"rendered":"<p>I spoke at a meeting of the Tax Justice Network in Luxembourg last night on the theme of tax competition.<\/p>\n<p>These were my speaking notes:<\/p>\n<p><a href=\"http:\/\/www.taxresearch.org.uk\/Blog\/2016\/04\/14\/tax-competition-2\/tax-competition-2\/\" rel=\"attachment wp-att-33179\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-33179\" src=\"http:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2016\/04\/Tax-competition-362x1024.png\" alt=\"Tax competition\" width=\"362\" height=\"1024\" srcset=\"https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2016\/04\/Tax-competition-362x1024.png 362w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2016\/04\/Tax-competition-106x300.png 106w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2016\/04\/Tax-competition-80x225.png 80w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2016\/04\/Tax-competition-47x132.png 47w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2016\/04\/Tax-competition.png 1554w\" sizes=\"auto, (max-width: 362px) 100vw, 362px\" \/><\/a><\/p>\n<ul>\n<li><span class=\"il\">Tax<\/span> <span class=\"il\">competition<\/span>\n<ul>\n<li>The Panama Papers\n<ul>\n<li>The evidence that <span class=\"il\">tax<\/span> abuse take place on the industrial scale we have always expected<\/li>\n<li>And evidence of the enormous use of one of the most egregious <span class=\"il\">tax<\/span> havens - almost 2,000 registered advisers having referral links<\/li>\n<li>Appropriate political fall out<\/li>\n<li>And some immediate, if largely inconsequential, changes to EU country-by-country reporting<\/li>\n<li>And an appropriate back drop to next month's world corruption summit<\/li>\n<li>Where it is already clear the UK will not rise to the challenge with regard to its own <span class=\"il\">tax<\/span> havens, which has fatally undermined the process before it has even begun<\/li>\n<\/ul>\n<\/li>\n<li>But there's a need to step back to ask what this issue is really all about\n<ul>\n<li>Because for all that is said offshore <span class=\"il\">tax<\/span> abuse is not as important as domestic <span class=\"il\">tax<\/span> abuse<\/li>\n<li>And more <span class=\"il\">tax<\/span> evasion is done by small business than multinational companies<\/li>\n<li>But I do argue that <span class=\"il\">tax<\/span> havens are at least as pernicious as everyone thinks they are, because their impact on our society is so wide<\/li>\n<\/ul>\n<\/li>\n<li>In an article in the FT today it was argued that <span class=\"il\">tax<\/span> havens\n<ul>\n<li>Facilitate trade, investment and economic growth<\/li>\n<li>Have helped world GDP double in two decades<\/li>\n<li>Have especially helped developing countries by connecting them to world markets<\/li>\n<li>Are amongst the best regulated jurisdictions in the world<\/li>\n<li>Have opened up China<\/li>\n<li>Raise the status of the UK in the world<\/li>\n<li>Increase UK employment<\/li>\n<li>Tamper with <span class=\"il\">tax<\/span> havens at your peril, Richard Hay<a href=\"http:\/\/app.ft.com\/cms\/s\/3a19652c-00b5-11e6-99cb-83242733f755.html\" target=\"_blank\">http:\/\/app.ft.com\/cms\/s\/<wbr \/>3a19652c-00b5-11e6-99cb-<wbr \/>83242733f755.html<\/a><\/li>\n<\/ul>\n<\/li>\n<li>But note the title\n<ul>\n<li>Written by a lawyer well known for acting on behalf of<span class=\"il\">tax<\/span> havens<\/li>\n<li>There is a threat implicit in there<\/li>\n<\/ul>\n<\/li>\n<li>And note what the author says makes <span class=\"il\">tax<\/span> havens work\n<ul>\n<li>British law<\/li>\n<li>British back up<\/li>\n<li>The implicit British guarantee<\/li>\n<\/ul>\n<\/li>\n<li>This article was written for a primarily UK audience but a great deal would apply to Luxembourg\n<ul>\n<li>Except here you would argue long established law<\/li>\n<li>Excellent communications<\/li>\n<li>The backing of the EU<\/li>\n<li>And the membership of the Eurozone might (maybe) achieve the same outcome<\/li>\n<\/ul>\n<\/li>\n<li>There are three things to note\n<ul>\n<li>First there is nothing at all to support these claims.\n<ul>\n<li>Nothing but a little dubious accounting related to even more dubious <span class=\"il\">tax<\/span> reporting ever happens in a <span class=\"il\">tax<\/span> haven<\/li>\n<li>There is no money in <span class=\"il\">tax<\/span> havens - nothing can be made there because nothing happens within them<\/li>\n<li>To therefore take claim for the hard work and achievement of others is an act of the most staggering arrogance<\/li>\n<\/ul>\n<\/li>\n<li>This is the arrogance of financial wealth\n<ul>\n<li>That clams credit is due to the owners of money because 'they're worth it'<\/li>\n<li>And in case you're in doubt they're willing to threaten you into agreement<\/li>\n<\/ul>\n<\/li>\n<li>They know the claims made are not true\n<ul>\n<li>As the article makes clear, the reality is that <span class=\"il\">tax<\/span>havens actually free ride on the legal systems, regulation, enforcement and capacities of other nations whilst celebrating their own supposed absence from red tape. The hypocrisy is staggering<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li>So what is really going on?\n<ul>\n<li>There are, again, three things to note<\/li>\n<li>First, let's be clear what <span class=\"il\">tax<\/span> havens do\n<ul>\n<li>They provide secrecy as cover for\n<ul>\n<li><span class=\"il\">Tax<\/span> abuse<\/li>\n<li>Regulatory abuse<\/li>\n<li>Competitor abuse<\/li>\n<li>Creditor abuse<\/li>\n<li>Spouse or family abuse<\/li>\n<\/ul>\n<\/li>\n<li>They provide low or no <span class=\"il\">tax<\/span> regimes\n<ul>\n<li>To deliberately undermine other government's choices<\/li>\n<li>To impose constraint on democratic choice<\/li>\n<li>To create unlevel playing field for those able to access these rates<\/li>\n<li>To shift the burden of <span class=\"il\">tax<\/span> from capital to labour<\/li>\n<\/ul>\n<\/li>\n<li>They provide a mechanism for the unaccountable flow of capital<\/li>\n<\/ul>\n<\/li>\n<li>So let's also be clear what they do not do\n<ul>\n<li>They do not create anything<\/li>\n<li>They do not add value<\/li>\n<li>They do not deliver real returns<\/li>\n<li>They are mere conduits<\/li>\n<\/ul>\n<\/li>\n<li>In the process they\n<ul>\n<li>Deny the information markets need to operate efficiently in accordance with the standard economic theory of markets<\/li>\n<li>They bias access to capital<\/li>\n<li>They provide artificial barriers to market entry for others<\/li>\n<li>They deliberately distort <span class=\"il\">competition<\/span><\/li>\n<li>They encourage the aggregation of financial wealth as if promoting monopoly<\/li>\n<li>As a consequence they increase local and global inequality<\/li>\n<li>Whilst undermining faith in\n<ul>\n<li>Free markets<\/li>\n<li>Democracy<\/li>\n<li>The financial system<\/li>\n<li>Society<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li>This is the foundation of so called <span class=\"il\">tax<\/span> <span class=\"il\">competition<\/span>\n<ul>\n<li><span class=\"il\">Tax<\/span> <span class=\"il\">competition<\/span> cannot exist without <span class=\"il\">tax<\/span> havens<\/li>\n<li>As their supporters make clear, <span class=\"il\">tax<\/span> havens are the locations from which <span class=\"il\">tax<\/span> <span class=\"il\">competition<\/span> is pursued<\/li>\n<li>But this is not <span class=\"il\">competition<\/span> or anything akin to it<\/li>\n<li>It is in fact the exact opposite: the whole purpose of<span class=\"il\">tax<\/span> <span class=\"il\">competition<\/span> is intended to undermine anything that approaches a\n<ul>\n<li>Well regulated<\/li>\n<li>Fair<\/li>\n<li>Consistently taxed<\/li>\n<li>Competitively effective environment<\/li>\n<\/ul>\n<\/li>\n<li>The result is that it is clear that <span class=\"il\">tax<\/span> <span class=\"il\">competition<\/span> is totally inappropriately named<\/li>\n<li><span class=\"il\">Tax<\/span> <span class=\"il\">competition<\/span> is in fact <span class=\"il\">tax<\/span> war on\n<ul>\n<li><span class=\"il\">Competition<\/span><\/li>\n<li>Markets<\/li>\n<li>The efficient allocation of capital<\/li>\n<li>Democracy<\/li>\n<li>Representative government<\/li>\n<li>Working people<\/li>\n<li>And any semblance of justice in all these fields<\/li>\n<\/ul>\n<\/li>\n<li>This is because those who remote <span class=\"il\">tax<\/span> <span class=\"il\">competition<\/span> do not believe in these things which have been the foundation of western democracy<\/li>\n<li>They do instead want to create a rentier economy\n<ul>\n<li>One where wealth can extract a <span class=\"il\">tax<\/span> free reward from the efforts of others<\/li>\n<li>And that those with wealth can live a life apart<\/li>\n<li>Untrammelled by accountability or being governed by the rules of any society<\/li>\n<\/ul>\n<\/li>\n<li>The language of <span class=\"il\">tax<\/span> <span class=\"il\">competition<\/span> should then be ignored\n<ul>\n<li>As should the weasel words of those who promote it<\/li>\n<li><span class=\"il\">Tax<\/span> <span class=\"il\">competition<\/span> is nothing less than a war on society as we know it<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>I spoke at a meeting of the Tax Justice Network in Luxembourg last night on the theme of tax competition. These were my speaking notes:<br \/><a class=\"moretag\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/2016\/04\/14\/tax-competition-2\/\"><em> Read the full article&#8230;<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35,80,32,97],"tags":[],"class_list":["post-33178","post","type-post","status-publish","format-standard","hentry","category-economics","category-secrecy-jurisdictions","category-tax-havens","category-tax-justice"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/33178","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=33178"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/33178\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=33178"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=33178"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=33178"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}