#G8, transparency, tax and “the soft bigotry of low expectations…”

On tax, and transparency, here’s the final communique from Lough Erne. Ten “shoulds”, all of them ‘good things’, based on self reporting. Ah, “the soft bigotry of low expectations” says Joseph Cotteril. No imminent world government then?

As The Economist noted last week:

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…offshore centres such as the Cayman Islands and Jersey, corporate service providers have had to collect ownership information since they first came under international pressure a decade ago, though they are sometimes slow or unwilling to turn it over to investigators. In America, by contrast, the information generally is not even collected. Indeed, states like Delaware and Nevada are among the easiest jurisdictions in the world in which to form a company without revealing who ultimately owns it.

This frustrates and embarrasses America’s crime-fighters, but the states’ lawmakers have blocked reform. Britain, with its bearer shares and easily abused limited-liability partnerships, is little better. Complaints from police about anonymous shells helped persuade Mr Cameron to make transparency a G8 theme.

So before they come for Ireland, it seems that the UK and the US have some homework of their own to catch up on:

Chancellor George Osborne unveiled plans for a UK register of companies and their owners. The White House also announced a similar plan for the US.

Last week the UK also unveiled a deal with its crown dependencies and overseas territories – including the Channel Islands, Gibraltar and Anguilla – to start sharing more information on which foreign companies bank their profits there.

About a fifth of offshore tax havens, which are used by multinationals to shelter cash from the tax authorities, are British dependencies.

“Of course Britain’s got to put its own house in order,” said Mr Osborne, adding that the government would launch a consultation on whether the register should be published or just be available to the HMRC.

Speaking during the summit, Mr Osborne said more progress had been made on reforming the global tax system in the past 24 hours than the “past 24 years”

As noted at the outset, the G8 is about trying to set agendas, not sealing deals. This may be a statement of collective intent to begin rolling up the carpet on tax loop holes rather than avoidance per se.

But don’t hold your breath

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  • Ruarai

    My old client ActionAid – well, their UK affiliate – has a superb campaign running on this, check it out:

    http://taxheaven.org.uk/

    If follows the sterling work they did previously on their Calling Time report and expose: http://www.actionaid.org.uk/sites/default/files/doc_lib/calling_time_on_tax_avoidance.pdf

    Keep an eye on Jenny’s G8 reaction: https://twitter.com/jenny_ricks

  • cynic2

    This is all so much twaddle

    Company officers have a duty to their shareholders to pay all taxes legally required but no more. If the tax system let them pay less that’s a problem for Governments, not companies.

    One of the issues for the UK is,a s Sammy dared to say, Irish Company Law which encourages companies to base their notional HQs there as part of a conscious Government policy.

    Many others do the same – but we don’t talk about the Politicians cock ups only the wicked companies and the charge is led by the Guardian whose assets are held overseas protected by a Trust and which makes a loss every year so it pays zero tax. Funny that innit

  • Ruarai

    Anyone with even the most remote familiarity with the issue of global tax avoidance is already well-aware that its an architectural problem – if you can, many will – as much as anything else and that only architectural reform can redress it.

    How one markets a campaign to draw attention to this problem and the beginnings of a solution (or at least an amelioration) is another question entirely.

    ActionAid’s work on this issue offers a first class case study in melding strong analysis with doable solutions with great PR.

    Well done all involved.

    The blatantly obvious raw injustice that sees an impoverished Ghanaian saleswoman pay more tax than a multinational company “stationed” behind her on the same street is an affront no sophistry can disguise or minimize.

    Thanks to today’s negotiations, we may be on the verge of a better way.

  • In many ways, Cynic has this bang to wraps.

    ‘Company officers have a duty to their shareholders to pay all taxes legally required but no more. If the tax system let them pay less that’s a problem for Governments, not companies.’

    I wouldn’t rely too much on the duty of an officer to do what’s legal or right (the current GFC is testament to that) tbh but this is really a problem for governments dazzled by big money. Granted, some nuance should be added that when you have pols in the back pockets of big business and detached from the populace as a whole then it becomes a problem of companies forcing through policy that serves only their narrow interests and not the interests of a democracy as a whole. The it really is wicked companies trying to act in a manner whereby money talks and the democratic will of the people is left on the road side.

    ‘One of the issues for the UK is,a s Sammy dared to say, Irish Company Law which encourages companies to base their notional HQs there as part of a conscious Government policy.’

    Not wishing to be a pedant but company law is different to tax law, the former doesn’t encourage a company to have a HQ in Ireland, the latter might. What Sammy ‘dared to say’ is that the South is engaged in theft, a criminal offence. It is not. You can organise a company structure with tax avoidance which is perfectly legal. Why I have and many others have derided him is his use of fairly simplistic, unnuanced dog whistle hyperbole which as someone who works in this kind fo work I found to be so unsophisticated and hysterical ranting that I could not take anything he said remotely serious.

  • Surely it should be fairly easy to ensure that the likes of Amazon and Google pay their share in the countries where they do business. Simply apply a tax to international money transfers. A few exceptions could be allowed – a personal non-taxable allowance of, say, 10,000 so as not to affect people who send part of their earnings to poor family members in undeveloped countries. Same for registered charities who meet certain criteria – no levy.
    That might also counter the excesses of the sort of people we used to call “Gnomes of Zurich”.

  • It’s another world, you know:

    The BBC website reports:

    1341: A Labour and Co-operative MP says the weakness of the Loch Earn declaration on tax is that there are no means of holding countries to account, and fears little progress will be made.