Bye, bye, Barack......

And so we say farewell to Barack Hussein Obama. 44^th POTUS. A good many British voters might well say ‘And good riddance, too!’

 

His keynote address was cold, condescending and downright insulting. To suggest that Great Britain with a population in excess of 60 million, the centre of the world financial services industry, the world’s fifth largest economy with a current growth-rate twice those of Germany and France and ten times that of Italy, the second largest aero-space industry, and much more, is incapable of thriving outside the stifling embrace of Brussels is not only belittling but downright insulting and ignorant.

 

And, worst of all, to say that outside the EU Great Britain would ’go to the back of the queue’ for trade deals was a threat; ‘do what I tell you to do or face unpleasant consequences’.

 

Boris Johnson weighed in with a typical Bojo defenestration of  Obama’s hijacking of the referendum debate. This was a long piece exclusive to The Sun. His central theme was in response to Obama’s ‘back of the queue’ threat (to be fair, it’s obvious that the speech was cleared and maybe edited in Number 10. The give-away is the word ‘queue’. This is a purely British usage that does not appear in the American lexicon).

 

He might also have added that there is no queue; Obama’s Pacific and European trade deals are stalled and he has not the slightest prospect of getting either through Congress. Neither have his successors. American business in  open competition with low-cost Asians? Turkeys might just vote for Thanksgiving!

 

Boris was immediately attacked for being ’racist’. His crime was to refer to the removal of the bust of Churchill from the Oval Office and reflect on  Obama’s origins. This is the totality of his reference during a long article.

 

‘Some said it was a snub to Britain. Some said it was a symbol of the part-Kenyan President’s ancestral dislike of the British empire – of which Churchill had been such a fervent defender.’

 

That’s all. Anyone who finds this ‘racist’ will find racism around every corner and be in need of remedial treatment..

 

The truth of the matter is that by-and-large the British have never taken to Obama.

 

At least he has secured his place in history. No POTUS has ever been so unpopular in the UK, although there have been close contenders such as Nixon. The ’Churchill bust’ saga was extensively reported in the British media and was generally  interpreted as a snub. Special relationship? That was a Churchillian construct; forget about it. At the time we were led to believe that it had been handed over to the Foreign Office. Now Obama says that he passes it every day in its new position.

 

Perhaps it’s in the Presidential bathroom.

 

 

 

 

 

Tax dodgers? Bah, humbug!

The hypocrisy over so-called tax dodgers is so thick you could lay it on with a trowel.

 

Osborne tells us  that there will be a ‘crack-down’ on tax havens. Well, we know all about his ‘crack-downs; we have been here before. Remember the ‘Lagarde List’ under which the Swiss government agreed to provide details of personal deposits by British taxpayers in Swiss Banks? Of course, the really big accounts are those of major companies, not wealthy individuals, so the effect was never going to be very dramatic. And so it turned out. The Swiss were given 18 months grace before disclosure kicked in, plenty of time to shift the accounts to more accommodating jurisdictions.

 

And so it came to pass!

 

The tax take from the ‘crack-down’ was derisory, HMRC had only one successful prosecution, and Switzerland remains at the top of the secrecy’ league table.

 

Hypocrisy kicks in big-time in relation to both the UK and the US. These are the world’s biggest tax havens.

 

The favourite US destinations are Delaware with more than 1 million ‘tax efficient vehicles’, and Wyoming, Nevada and Oregon with nearly 700,000 between them. There is a TEV for every six residents in Nevada.

 

Osbourne reckons to have another tilt at the Isle of Man and the Channel Islands. Since none is a tax haven and all comply with OECD disclosure requirements the tax haul will not solve George’s deficit problem any time soon.

 

Then there is the essential question: where’s the harm?

 

The ‘colonial’ tax havens, mostly in the Caribbean, were sponsored by HMG so that they might become self-supporting. As the Prime Minister of BVI pointed out in a recent TV interview, if its TEVs were closed down, HMG would be left to pick up the tab (current BVI GDP is around US$ I billion). The IMF reckons that BVI holds at least US$ 600 billion, but this is almost certainly an underestimate that does not take account of massive Chinese inflows in recent years.

 

Little of this has any discernible impact on the British people; we should not imagine in our wildest hallucinations that if Osborne strikes it rich by squeezing the tax dodgers he will reduce UK income tax, especially after he has finished refinancing the ’colonials’ from the DFID budget or confer any other benefit on the taxpayer.

 

What has had a massive impact on the people is the euphemistically-named Financial ‘Services’ Industry. It is a midden of chicanery, malfeasance and downright fraud. Ordinary people who relied upon deposits of their life-savings have seen the interest income fall to practically nothing, but with breath-taking spreads against loan rates, because of the world-wide financial crisis brought about by the reckless greed of financiers. Then there was – and continues to be – the PPI scandal in which the banks persuaded their customers to divvy-up £20 billion on insurance against non-existent risks.

 

And yet not only do the villains go unpunished but continue to draw salaries that often border on the obscene whilst continuing to profit from businesses rescued by the taxpayer.

 

Barclays Bank is a classic example. It has over 500 staff who are paid more than £1 million each, and nearly 1500 earning more than £500,000. Since half the remaining staff actually get paid less than then average wage, it is pretty obvious that the bank was being run not for the benefit of shareholders, customers or the workforce but for the fat cats at the top.

 

The ethical standards of the industry strike us ordinary laymen as being appalling.

 

At one level we have young people getting far too much money, whose sole motivation is to make as much as possible without any intrinsic job-satisfaction, and who regularly appear in the Red Tops because of their abuse of alcohol, drugs and sex. The customers are ‘muppets’, at least within Goldman Sachs. But at the highest level most malfeasance goes unpunished. In the UK there have been no prosecutions, although the boss who ruined the Royal Bank of Scotland had to accept the reduction of his pension to a mere £350k or thereabouts.

 

Financial institutions in the US have paid eye-watering fines; their customers’ money. In Britain we have had the IBOR scandals in which rate submissions were routinely falsified. But since the days of Gordon Brown politics has been the captive of the City.

 

Plus ca change!

 

 

 

 

Corbyn the Empire Builder.....

Corbyn comes across as batty as Baldrick every time he opens his mouth. Take his response to the Panama pantomime.

He has a cunning plan.

He wants the UK government to take over the Crown Dependencies to stop them being tax havens

As they are not part of the UK that might present a problem. They would have to be annexed forcibly. How are you going to manage that, Jezza? Send in the SAS?

Here is the constitutional position

The UK has no democratic accountability in and for the Crown Dependencies, which are governed by their own democratically elected assemblies;

It will not act internationally on behalf of the Crown Dependencies without prior consultation; each Crown Dependency has an international identity that is different from that of the UK; the UK supports the principle of each Crown Dependency further developing its international identity; it recognises that the interests of each Crown Dependency may differ from those of the UK, and the UK will seek to represent any differing interests when acting in an international capacity; and the UK and each Crown Dependency will work together to resolve or clarify any differences that may arise between their respective interests.

So there you have it. The UK takes care of foreign affairs and defence. That’s about it. The Crown Dependencies are to all intents and purposes independent states.

Then there is the issue of ‘tax havens’. The Crown Dependencies are not. They are merely lower tax regimes. If you win the lottery it’s no use hiding your wedge there because they will notify the UK tax authorities of any income and charge a hefty withholding tax if you fail to give your UK TIN.

If you bring in largish sums of money, the Financial Services authority will want to know where it came from. Failure to comply might see you end-up in the slammer.

But you might start closer to home, comrade.

In 40 years, the UK is named 148 times in the Panama papers; Jersey 38 times, and the Isle of Man just 8. Guernsey doesn’t even get a mention

The most secretive tax havens are 1. Switzerland; 2. Luxembourg; 3. Hong Kong (fancy mixing it with China, Jeremy?).

Well, you could have a pop at the US which comes in at number 6 in the league table of 80+ jurisdictions. Delaware and Nevada are particularly welcoming; ‘tax efficient vehicles’ there are completely anonymous.

 

 

Panama Panto

Just when the headlines were bleak (terrorism), boring (the referendum) or banal (Trump), along comes the ‘Panama Panic’ pantomime to add to the gaiety of nations. We have the spectacle of politicians, big-shot businessmen, ex-Presidents of tropical hell-holes, crooks, gangsters and money launderers running around in  ever decreasing circles with the inevitable eventual result.

Panama may be a leading player, but there are many others across the globe, from Nevada to Macao.

There is one closer to home which  is one of the biggest tax-havens.

 

At the last count, 340 leading companies launder hundreds of billions through it, paying a derisory  amount of tax on profits, about 1%. Tax on non-dividend income is 0.25%. It is favoured by PepsiCO which moved $750 million to minimise its tax liability on a $1.5 billion purchase of a Russian company, en route to Bermuda. IKEA has a holding company and a finance company to massage its tax liability.

 

There are other familiar names. FIAT and Amazon are amongst the most prominent. There’s Glaxo Smith Klein, the Pearson Group (FT and Economist), Northern and Shell (Daily Express). Fedex launders millions to its eventual destination in Hong Kong. It paid 0.25% tax on its non-dividend earnings. American companies paid 1.1% tax on profits of $95 billion.

 

Key players include Accenture, Abbott Laboratories, American International Group (AIG), Amazon, Blackstone, Deutsche Bank, H.J. Heinz, JP Morgan Chase, Burberry, Procter & Gamble, the Carlyle Group and the Abu Dhabi Investment Authority.

 

One of the most intriguing is that bastion of public morality the Guardian Media Group.

 

US and UK companies lead the pack. $95 billion of American corporations’ profits  flowed through in 2012. The tax paid was 1.1%. Direct investment from the US  in 2013 was $416 billion, most of which was in ‘tax-efficient vehicles’.

 

$3.7 billion is held in managed assets, second only to the US. PWC advises hundreds of companies in how to use the system, employing 2.300 staff for the task. Complex accounting and legal structures are used to move money in and out, giving a tax rate of less than 1%. The Government issues hundreds of private tax rulings – ‘comfort letters’ – giving favourable tax treatment.

 

Tax revenues from this huge market are 5% of GDP, higher than British agriculture’s share of GDP in the UK.

 

The country raking in  all this funny money has a population of about 500,000. It covers only about 1000 square miles.

 

You will have guessed by now that the country is Luxembourg.

 

And who was the Prime Minister who presided over this gargantuan tax scam for more than 15 years?

 

Step forward Jean-Claude Juncker.

 

And who is head of the EU which has vowed to crack down on tax dodgers?

 

That’s right!