Google, Amazon and Starbucks and many more like them are being accused of cheating the tax system. But Matt Brittin, Google’s UK Chief said on Channel 4 News“ [Google] plays by the rules set by politicians.” He is not wrong. The rules of the international tax system do not just let this happen, they actively encourage it. The rule of the capitalist game is that one side earns its money from another's losses.
Tax avoidance, evasion, theft, call it what you will, is endemic all over the world and organised through an intricate system of tax havens. One of the most important - the City of London - sits right under the noses of the British politicians who are today decrying the corporations who use it. For British MPs, it means looking down the road at the City of London and asking questions like, why does the City of London have special exemptions from the Freedom of Information Act?
Tax havens exist solely to help the rich avoid national taxes. Multinationals happily extract profits from countries and then send it to tax havens to avoid paying their share of taxes. Tax havens help wealthy individuals and large corporations escape from criminal laws, from financial regulation, from transparency and disclosure, from inheritance rules, from professional liability, and more. Take your money to a tax haven, and your home rules no longer bind you. In other words, tax havens help wealth elites escape from the rules of civilized society, whether by illegal means or not. The secrecy facilities or tax loopholes provided by the 600,000-odd International Business Companies in the British Virgin Islands are not for the benefit of local islanders: they are for foreigners.
The Tax Justice Network's Financial Secrecy Index or FSI which combines a jurisdiction's secrecy score with a weighting for the size of its offshore financial sector, reckoned in 2009 that the world's five most important providers of offshore financial secrecy were the United States, Luxembourg, Switzerland, the Cayman Islands and the United States, in that order. Another study gave Switzerland the top rank, followed by the Cayman Islands, Luxembourg, Hong Kong, and the USA. In both cases, however, Britain would have ranked head and shoulders above the others if included were the British Overseas Territories and Crown Dependencies as part of Britain.
The City of London financial center runs a series of satellite tax havens, spread across the world in concentric rings. In the inner ring are Britain's Crown Dependencies: Jersey, Guernsey and the Isle of Man. The next ring out are the 14 Overseas Territories: the last remnants of the British Empire, which include some of the world's most important small island tax havens: the Cayman Islands, the British Virgin Islands, Bermuda, Turks and Caicos, Anguilla and Gibraltar. These two offshore networks, which are essentially the last remnants of the British Empire, are partly British, and partly independent. Each has its own political system with its own independent politics, but each has a Governor (or Lieutenant Governor) appointed by the Queen. Britain is officially responsible for their foreign relations and defense, and for their good governance. The last court of appeal is the Privy Council in London.
Further out in the web are a number of other tax havens with ongoing strong historical or commercial ties to the UK: Hong Kong, Mauritius, the Bahamas, and others. From Britain's point of view, this network operates along the lines of a spider's web, with the City of London at the center. Each haven tends to have something of a geographical focus: the Caribbean havens focus most heavily on North, Central and South America, while the Crown Dependencies will focus most heavily on European business, as well as Africa and the Middle East. They capture huge amounts of money (and the business of handling money) up to the City of London. Just in the second quarter of 2009 the UK received net financing of US$332.billion just from its three Crown Dependencies. Martyn Scriven, secretary of the Jersey Bankers' Association, describes the relationship: "If I have money to spare, I pass it to the father. Great dollops of money go into London from here." Promotional literature for Jersey Finance, says it plainly: 'Jersey represents an extension of the City of London" .
It may surprise some people to discover that the United States is also a gigantic tax haven in its own right, thanks to state-level laws that allow the formation of anonymous corporations providing bullet-proof secrecy, and federal laws that for decades have deliberately turned a blind eye to dirty foreign money, often fed into Wall Street by foreign 'feeder' tax havens.
The biggest tax havens, it turns out, are not the small islands of the popular imagination, but the world's biggest economies.
Somewhere between $21 and $32 trillion is hidden behind the vast walls of tax haven secrecy. That’s the equivalent of one third of all global annual income. Somewhere between 60 and 70% of all international trade flows through them so that profits can be siphoned off untaxed. Forget the 1% - this industry exists largely for the pleasure and benefit of the 0.02%; the 10 million people who ‘own’ the bulk of the $21trillion hidden. Tax havens are in the background of practically every instance of large-scale corruption and economic crime of the last thirty years. Every corrupt leader, every major arms dealer and drug cartel, as well as most multinational corporations rely on their ‘discretion’ to do business.
George Osbourne’s sheds crocodile tears with the seemingly helpful decision to put £150m into the British tax collection authority to help catch corporate theft of this kind. It would be a strange world indeed in which we found the ConDems waging a war on the rich. If it were real, it would be a suicide mission, but it is not real. It is pure chicanery in an attempt to charm the public. Osbourne is the man who, just only this year, actively undermined EU efforts to tackle tax havens by signing a bilateral deal with Switzerland that protects the secrecy of tax thieves for a one-off cost of the payment of some back taxes.
Adapted from here
See also SOYMB earlier post here
Tax avoidance, evasion, theft, call it what you will, is endemic all over the world and organised through an intricate system of tax havens. One of the most important - the City of London - sits right under the noses of the British politicians who are today decrying the corporations who use it. For British MPs, it means looking down the road at the City of London and asking questions like, why does the City of London have special exemptions from the Freedom of Information Act?
Tax havens exist solely to help the rich avoid national taxes. Multinationals happily extract profits from countries and then send it to tax havens to avoid paying their share of taxes. Tax havens help wealthy individuals and large corporations escape from criminal laws, from financial regulation, from transparency and disclosure, from inheritance rules, from professional liability, and more. Take your money to a tax haven, and your home rules no longer bind you. In other words, tax havens help wealth elites escape from the rules of civilized society, whether by illegal means or not. The secrecy facilities or tax loopholes provided by the 600,000-odd International Business Companies in the British Virgin Islands are not for the benefit of local islanders: they are for foreigners.
The Tax Justice Network's Financial Secrecy Index or FSI which combines a jurisdiction's secrecy score with a weighting for the size of its offshore financial sector, reckoned in 2009 that the world's five most important providers of offshore financial secrecy were the United States, Luxembourg, Switzerland, the Cayman Islands and the United States, in that order. Another study gave Switzerland the top rank, followed by the Cayman Islands, Luxembourg, Hong Kong, and the USA. In both cases, however, Britain would have ranked head and shoulders above the others if included were the British Overseas Territories and Crown Dependencies as part of Britain.
The City of London financial center runs a series of satellite tax havens, spread across the world in concentric rings. In the inner ring are Britain's Crown Dependencies: Jersey, Guernsey and the Isle of Man. The next ring out are the 14 Overseas Territories: the last remnants of the British Empire, which include some of the world's most important small island tax havens: the Cayman Islands, the British Virgin Islands, Bermuda, Turks and Caicos, Anguilla and Gibraltar. These two offshore networks, which are essentially the last remnants of the British Empire, are partly British, and partly independent. Each has its own political system with its own independent politics, but each has a Governor (or Lieutenant Governor) appointed by the Queen. Britain is officially responsible for their foreign relations and defense, and for their good governance. The last court of appeal is the Privy Council in London.
Further out in the web are a number of other tax havens with ongoing strong historical or commercial ties to the UK: Hong Kong, Mauritius, the Bahamas, and others. From Britain's point of view, this network operates along the lines of a spider's web, with the City of London at the center. Each haven tends to have something of a geographical focus: the Caribbean havens focus most heavily on North, Central and South America, while the Crown Dependencies will focus most heavily on European business, as well as Africa and the Middle East. They capture huge amounts of money (and the business of handling money) up to the City of London. Just in the second quarter of 2009 the UK received net financing of US$332.billion just from its three Crown Dependencies. Martyn Scriven, secretary of the Jersey Bankers' Association, describes the relationship: "If I have money to spare, I pass it to the father. Great dollops of money go into London from here." Promotional literature for Jersey Finance, says it plainly: 'Jersey represents an extension of the City of London" .
It may surprise some people to discover that the United States is also a gigantic tax haven in its own right, thanks to state-level laws that allow the formation of anonymous corporations providing bullet-proof secrecy, and federal laws that for decades have deliberately turned a blind eye to dirty foreign money, often fed into Wall Street by foreign 'feeder' tax havens.
The biggest tax havens, it turns out, are not the small islands of the popular imagination, but the world's biggest economies.
Somewhere between $21 and $32 trillion is hidden behind the vast walls of tax haven secrecy. That’s the equivalent of one third of all global annual income. Somewhere between 60 and 70% of all international trade flows through them so that profits can be siphoned off untaxed. Forget the 1% - this industry exists largely for the pleasure and benefit of the 0.02%; the 10 million people who ‘own’ the bulk of the $21trillion hidden. Tax havens are in the background of practically every instance of large-scale corruption and economic crime of the last thirty years. Every corrupt leader, every major arms dealer and drug cartel, as well as most multinational corporations rely on their ‘discretion’ to do business.
George Osbourne’s sheds crocodile tears with the seemingly helpful decision to put £150m into the British tax collection authority to help catch corporate theft of this kind. It would be a strange world indeed in which we found the ConDems waging a war on the rich. If it were real, it would be a suicide mission, but it is not real. It is pure chicanery in an attempt to charm the public. Osbourne is the man who, just only this year, actively undermined EU efforts to tackle tax havens by signing a bilateral deal with Switzerland that protects the secrecy of tax thieves for a one-off cost of the payment of some back taxes.
Adapted from here
See also SOYMB earlier post here
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