By Andy Fenwick
The recent leaking of 7 million files covering the tax affairs of multi-national corporate companies and the super-rich, highlights yet again the world of the secretive offshore tax havens. These files only were from only one tax-advising legal firm, Appleby, so it can be assumed that the stench stretches much further.
Over 20 countries hold a special status primarily related to “Secrecy Jurisdictions” the technical term for tax havens from Antigua to Jersey, from the Isle of Man to Trinidad. Because of the secretive nature of these transactions estimates for the amounts hidden from the taxman range between US$30 trillion and US$130 trillion, which is staggering amount when compared to World GDP of US$107.5 trillion. For British-based hidden cash alone the minimum estimate is £2 trillion.
The trick to “Tax-minimising”, is that the giant multi-national companies relocate their corporate headquarters to a tax haven like Guernsey. Of course, the real headquarters staff don’t re-locate to this small channel island. To accommodate them all, it would take an enormous office. All it takes is a tiny ‘name-plate’ office.
For Apple Corporation, the registered HQ is in Appleby’s Jersey branch, in an office so small that an Appleby employee cannot find it. Apple are good at technology, so have they developed a real Dr Who TARDIS to squirrel away all their staff. Of course, these bogus corporate addresses are only used to divert profits to in order not to pay tax. Apple claim that on millions of sales in the UK, they hardly generate any profit but an office in the Channel Islands without any staff makes billions.
The Paradise Papers reveal a large number of corporate giants such as Facebook and Nike getting away with not paying tax. In addition, it looks like people such as Bono and Lewis Hamilton are investing millions of pounds in offshore accounts to avoid tax. A simple scam practiced by three actors from the BBC show “Mrs Brown’s Boys” has their acting “fees” placed into the account of an offshore company, which then gives interest-free (and never-to-be-repaid) loans to the actors – and no tax or national insurance is paid on a “loan”.
The defence that is adopted by these individuals is that of ignorance, typically, “It was in the hands of my accountant I knew nothing”. Workers will ask, how is it that for ordinary people ignorance of the law is no defence but for these rich people it is some kind of justification? The second defence is a moral/ethical validation that is, “if we all could get away with it we would” so let’s all forget about how we finance hospitals schools, fire services and so on. Yet these people rely heavily on one part of our public services – the judiciary and liable and copyright laws – to protect their interests. Perhaps intellectual property rights should not be available to tax dodgers.
This particular scandal has brought into disrepute the royal family. We now know that the Queen and her heir, Prince Charles, have benefitted from investments in offshore accounts. If the head of Her Majesty’s Revenue and Customs is dodging “her own” taxes, it is time to call a halt on the whole ‘royal’ farce and bring the vast wealth of the Duchies of Lancaster and Cornwall back into the hands of the British people where they really belong.
These kinds of people have at their disposal an army of accountants and lawyers, all willing to bend the rules, if not actually write the rules. In Britain, there is a constant revolving door game between the top firms of accountants and Her Majesty’s Revenue and Customs (HMRC). Individual accountants will move from HMRC to the accountancy firms and vice versa, sometimes being ‘seconded’ from one to the other. Thus, the gamekeepers’ rules can be closely monitored, or even written by the poachers. Tax loopholes, in other words, are permanently available. In the tax havens, it is even more blatant than that: the accountants propose changes to the local tax laws in the interests of their clients and these, as often as not, will be adopted.
What is the Government’s response? We have the same old platitudes: “we will look into this and call for more light to be cast on the situation”. Will Teresa May really tackle this when she is married to one of the most influential tax-avoiding expert in the country? We have heard it all before under Cameron, but instead of tax laws being tightened up, all we got was cosy lunches between head of HMRC and corporate CEOs, offering to pay in some piddling sum out of petty cash. Theresa May says that the rich are paying more now than ever before, but the simple answer to that is that the wealth of the rich and super-rich has increased to levels higher than ever before. In fact, because so many of these tax-havens are ‘Crown colonies’, like the Channel Islands, the Isle of Man, Bermuda, the British Virgin Islands, and so on, any British government could stop their tax-dodging in days, if they wanted to. The fact is, they don’t want to.
Nothing will change under the present system. The Tories are following the dictates of capitalism, that wealth has to be diverted from the poor to the rich to maintain a collapsing system. Tax evasion is only one of the tools to facilitate this transfer. Exposes like this will be repeated again and again, with increasing frequency. In fact, this is already déjà vu. We have had the Panama Papers, leaked in 2015, the HSBC Swiss branch files, the Luxembourg files.
Socialists should broadcast this information as widely as possible and draw attention to it. The press and TV will very quickly drop it, as they have dropped similar scandals in the past. After all, most newspapers are owned by tax-dodging millionaires. But the scandal should increase the determination of Labour members that we get a Labour Government committed to real socialist policies, to end this disgraceful state of affairs once and for all.
November 7 2017
