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!