Tax havens and Promontory Financial Group: a “safe pair of hands?”

[vc_row][vc_column][vc_column_text]This tweet has tickled our antennae:[/vc_column_text][vc_raw_js]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[/vc_raw_js][vc_column_text]Now this presumably relates at least in part to this recent episode: what the New York Times calls: Continue reading “Tax havens and Promontory Financial Group: a “safe pair of hands?”” →

Will Brazil’s “CPMF” financial transactions tax live another day?

One Brazilian interest group cheers the CPMF's abolition in 2007.

One Brazilian interest group – senators – cheer the CPMF’s abolition in 2007.

For the decade that lasted up to 2007, Brazil levied a tax on financial transactions called the CPMF. It was a biggy: this tax raised nearly $20 billion in its last year of operation before it was killed off by a coalition of people opposed to it, some of whom are in this photo.

The tax had two main purposes: first, raising revenue; and second, affecting behaviour, such as to reduce speculative ‘churn’ in favour of longer-term investment activity. (These are standard motivations for financial transaction taxes.) This appraisal explains the CPMF itself: Continue reading “Will Brazil’s “CPMF” financial transactions tax live another day?” →

Urry: “offshoring and democracy are in direct conflict.”

John-Urrys-Offshoring-199x300From a useful long review of John Urry’s book Offshoring, which was published a year ago and tackles issues close to us:

“Whether it is the work of capital or governments, ‘offshoring and democracy are in direct conflict’ . Urry wisely refuses to entertain the idea that offshoring’s antipathy to regulation represents the promise of freedom. Offshoring in itself has no redeeming qualities. It entails the triumph of private greed over the commons, the externalization of costs and the production of ignorance. It reveals corporate capital and criminal capital becoming ‘progressively undifferentiated’, such that ‘members of the contemporary bourgeoisie behave more and more like criminals’. Ultimately, offshoring helps the ‘rich class’ to become richer while also allowing them to disentangle themselves from the fates of most of those with whom they share a planet.”

We can agree with all of that, and it’s a good summary of what’s gone wrong with the world economy. Essential reading for those exploring this area.

Quote of the day: a tectonic shift in accounting standards

Yesterday we received an email containing our quote of the day:

“this decades-overdue accounting rule is a historic development of tectonic proportions. It will enable analyses never before possible and vividly tie the opportunity costs of economic development to other public priorities.“

Our emphasis added. We wrote about this recently, but thought we’d underline its importance, with this quote.

This comes from Greg Leroy of Good Jobs First, a non-profit organisation dedicated to exposing and opposing corporate welfare and the race to the bottom between U.S. states on taxes and subsidies. So many of these subsidies and pork are given in the name of ‘competitiveness’ (or some other weasel word.)

This change in the U.S. can and should serve as an inspiration to other countries, and international standard-setters and international financial institutions like the IMF, World Bank or OECD need to push for these kinds of changes, around the world. Continue reading “Quote of the day: a tectonic shift in accounting standards” →

Congratulations to Professor Richard Murphy

SONY DSC

Professor Murphy

TJN is delighted to hear that Richard Murphy, a long-standing senior adviser who has given enormous amounts of time to the tax justice movement since its founding in 2003, has been appointed as Professor of Practice in International Political Economy at the Department of International Politics at City University, London.

Richard will be teaching a course on the economics of the real world.

 

 

Quote of the day – Scottish land owned via tax havens

Andrew Wightman, a long time writer on land, power, governance, democracy and money in Scotland

Andrew Wightman, a long time writer on land, power, governance, democracy and money in Scotland

Our quote of the day comes from Jen Stout, from the Scottish Land Action Movement:

“We have to ask how it can be possible that vast swathes of our land in Scotland are registered in secretive tax havens. Land is a fundamental resource, not some speculative asset for the super-rich.”

Which is a very fair question indeed. The whole article is important reading for those wishing to understand the relationship between people, money, power and land in Scotland.

Meanwhile, south of the border, a reminder that we recently blogged this stunning interactive map from Private Eye, showing the extent of offshore ownership of property in England. See also, less extensively, Wightman’s site Who Owns Scotland.

Civil society calls on G20 finance ministers to end fossil fuel subsidies

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G20 finance ministers will be meeting in Ankara, Turkey, on 4th and 5th September 2015, under the Turkish G20 presidency.  In a letter to finance ministers, TJN and over sixty other civil society organisations call upon them to meet their commitments to phase out fossil fuel subsidies and support measures that will promote a global climate deal at the forthcoming UN FCCC COP21 summit in Paris, France this December.

Specifically, the letter calls on G20 finance ministers to:

1.  Implement the G20 commitment to end inefficient fossil fuel subsidies;

2. Agree to end public subsidies for coal;

3.  Proceed with delivering on climate finance needs.

The G20 countries spend an estimated $88 billion per year of public money to support exploration for new fossil fuel reserves.  At the same time the IMF estimates that local pollution from fossil fuel combustion will inflict costs exceeding $2.7 trillion in 2015, with much of that cost arising from coal combustion in G20 countries.

Fossil fuel subsidies cause huge distortions to energy markets.  Public funding of fossil fuel combustion reduces incentives for energy suppliers to diversify towards renewable forms of energy.  The failure to impose a cost on the damage caused by fossil fuel combustion allows energy suppliers to reap huge profits without paying for the resultant harm.

We will be writing further on this subject in a forthcoming edition of Tax Justice Focus, since we feel that these fiscal distortions play a major part in delaying the crucial transition to a less fossil fuel dependent economy.

Read the joint letter to G20 finance ministers

A selection of tweets to use on 4th and 5th September:

 

 

 

 

Selling England by the offshore pound: astonishing new interactive map

Britain’s Private Eye newspaper has produced the most astonishing map of offshore landholdings in England. If you live in England, you can browse your local area and find out which properties near you are owned offshore. (Perhaps you might want to pop out and ask them why.)  As Private Eye flag it:

“The map shows all land and property registered in England and Wales in the name of an offshore company between 2005 and July 2014.”

It really is remarkable.

And, as a reminder, here’s what some of this stuff looks like on the ground.

Why tax havens will be at the heart of the next financial crisis

Update: this has now been cross-posted at Naked Captalism

This post examines another excellent in-depth investigation by Reuters into global financial stability issues, and the role of tax havens in this giant game of pain and plunder. The investigation uncovers, among other things, a whole lot of offshore shenanigans, complementing what we (and relatively few others) have been saying for some years now, and it goes right to the heart of what capitalism is — or at least what it has become.

Before reading this, though, see the box “What is a tax haven?” There’s a lot of misunderstanding out there.

Continue reading “Why tax havens will be at the heart of the next financial crisis” →

As the murk grows, the UK rows back on money laundering checks

Updated with Cayman-related news.

From Global Witness, a new report entitled Banks and Dirty Money: How the financial system enables state looting at a devastating human cost. It’s got plenty of detail, but one eye-catcher is their look at the largest penalties given for money-laundering or sanctions violations.

See if you can spot the UK's biggest ever fine

UK vs. USA: With a magnifying glass, see if you can spot the UK’s biggest ever fine

In the U.K. the maximum slap on the wrist penalty is £8.75 million (about US$13.5 million).

In the U.S. it’s $8.9 billion. That’s Billion with a ‘b’. We’ve put this comparison into a handy graph, below.

Continue reading “As the murk grows, the UK rows back on money laundering checks” →

New report: anticipating tax wars in Southeast Asia

The ASEAN flag

The ASEAN flag

From the Fools’ Gold blog:

We’ve sometimes used the term ‘tax wars’ instead of ‘tax competition’ to describe the process by which countries try to tempt mobile capital by offering tax breaks, prompting others to follow suit in a race to the bottom. Countries often do this in the name of ‘tax competitiveness,’ which as we’ve shown is generally a fools’ errand — even from a purely self-interested national point of view.

Now an Indonesian group called Prekarsa has issued a note entitled Anticipating Tax War in the ASEAN Economic Integration Era, which raises many familiar concerns, particularly tax holidays. As they argue: Continue reading “New report: anticipating tax wars in Southeast Asia” →

Taxing Money Madness – now is the perfect time for FTT/Robin Hood tax

James S. Henry

James S. Henry

Taxing Money Madness — Why This Is A Perfect Time for a Robin Hood Levy on Financial Transactions

A guest blog for TJN by James S. Henry

If ever there was a perfect time to revisit the proposal to adopt a so-called “Robin Hood tax” (AKA the “financial transactions tax,” or the “Tobin tax“) and make it global, this is it.

In the last week we’ve just seen a very compelling reminder of why the Yale Prof. James Tobin (1972), a Nobel Laureate, and long before him, J.M. Keynes, a Cambridge don, were outspoken advocates of taxing financial transactions – in the case of Tobin, only currency purchase, but in the case of Keynes, all transactions in financial assets that might be subject to the speculative furies.

Continue reading “Taxing Money Madness – now is the perfect time for FTT/Robin Hood tax” →

No, tax isn’t lawful extortion (or theft)

tax is theft

Many people believe this

Updated with Chris Giles’ response. 

Sigh. If we had a penny for each time we heard this . . .

This claim is often associated with the U.S. libertarians, but this time it’s Chris Giles, a respected commentator in the Financial Times, in an article entitled How to be hard left without being stupid. It’s about the rise of Britain’s Jeremy Corbyn as front runner to lead Britain’s Labour Party: a man who one might argue is part of a global phenomenon that includes Podemos in Spain, Syriza in Greece, and the likes of Bernie Sanders in the U.S.: groups or people who are tapping into concerns about the nature of democracy, political corruption and in many cases a perceived rightwards shift in economic policy-making. Continue reading “No, tax isn’t lawful extortion (or theft)” →

Our Spanish language podcast: Justicia ImPositiva, Edición 1

Taxcast logo SpanishJusticia ImPositiva, Edición 1 del nuevo podcast de Tax Justice Network/Red de Justicia Fiscal

En este mes de agosto 2015: desvelamos las estrategias de los países poderosos para continuar manteniendo un sistema tributario que beneficie a las grandes corporaciones. ¿Sabías que al menos 26 bancos europeos transfieren sus beneficios a paraísos fiscales a través de sus sucursales? ¿Funcionara la nueva amnistía fiscal de Brasil? ¿Y sabias de la gran empresa minera que dejó de pagar 1,082 millones de dólares en impuestos en Perú? Hablamos con los analistas y expertos, Markus Meinzer, director del Índice de Opacidad Financiera de Tax Justice Network (Red de Justicia Fiscal) y John Christensen, director general de esta organización. Y en la última sección, abordamos los conceptos básicos del campo de la tributación con los especialistas Jorge Gaggero, miembro de la Red de Justicia Fiscal de América Latina y el Caribe e investigador del Centro de Economía y Finanzas para el desarrollo de Argentina- CEFID-AR y Corina Mora, responsable de comunicación e incidencia de la organización InspirAction. Bienvenid@s a este nuevo podcast @J_ImPositiva con @silvia1olmedo y @MonicaMarchesi coordinado por @Naomi_Fowler para @TaxJusticeNet

Jersey court may be ready to consider tax matters in future trust rulings

Bailhache: acknowledging the unethical side of tax avoidance

Bailhache: “strong ethical arguments”

A recent judgement on an application to rectify a Jersey trust suggests that the Royal Court of Jersey may in future take account of whether a trust is being used for tax avoidance.  Remarks by the island’s Bailiff (high court judge) William Bailhache are being interpreted by some Jersey lawyers as an indication that the Court might take the tax consequences and intentions of a trust scheme into account when considering future cases.

Commenting on the case of IFM Corporate Trustees (2015 JRC 160), Bailhache noted:

“The court was initially concerned that this particular scheme might have fallen into the category of aggressive tax avoidance. . . If that were so, [it] might therefore have been the sort of scheme where in the exercise of its discretion, the court should consider whether such a fact, if true, should lead to the refusal to exercise discretion in favour of the applicant.”

In the case of IFM Corporate Trustees the Court accepted that the tax planning did not constitute unacceptable tax avoidance, but in a remark that might send shivers up the backs of tax professionals on the wilder fringe, Bailhache noted
“Historically, the courts have always applied the principles of law rather than what are perhaps inchoate and uncertain ethical considerations in this area.  What seems to us perhaps to be open to argument is whether, in an area which involves the exercise of a judicial discretion in cases where the court’s assistance is being sought for a mistake which has been made, there is room for the argument that the discretion ought not to be exercised if on the facts of a particular case, the scheme in question is lawful but appears to be so contrived and artificial that it leaves the Court with distaste if, in effect, it is required to endorse it. ”  (our emphasis added)

This remark is potentially of seismic importance, since the tax intentions of trusts have not previously been considered relevant to cases where the Jersey Court has been asked to exercise its discretion to rectify a trust.  According to one Jersey law firm, Bailhache’s remark opens the way for the Court to take account of whether or not a trust might serve as a tax avoidance vehicle:

“Potentially, any application to the court involving its discretion […] may require the tax consequences and intentions of the scheme to be aired and subjected to a wider debate whether the court should go along with them.”

Nodding in the direction of the global tax justice movement, Jersey’s Bailiff also acknowledged the ethical implications of tax avoidance, noting the

“strong ethical arguments why taxpayers should recognise their obligations to the state in which they live, making their fair and appropriate contribution towards the outgoings which any modern state has in the provision of services for the benefit of the community.”

Who could reasonably disagree with that?

Read the Royal Court judgement here

 

The West African Tax Giveaway: new report

The ECOWAS headquarters in Abuja, Nigeria

The ECOWAS headquarters in Abuja, Nigeria

An important joint report has been published by TJN-Africa and Actionaid looking at corporate tax incentives and their impact in the Economic Community of West African States (ECOWAS) — and in particular Nigeria, Ghana, Cote d’Ivoire and Senegal.

The report’s first finding is that:

I. Corporate tax incentives – reductions in tax offered by governments presumably to attract investment – significantly reduce domestic revenue collection and are not necessary to attract foreign direct investment (FDI).

Continue reading “The West African Tax Giveaway: new report” →

The Tax Justice Network podcast, August 2015

In the August 2015 Tax Justice Network Podcast: Sun, sea and tax: the Taxcast goes to Mexico and looks at how multinational tourism operates there. Plus: we ask why Luxembourg is printing euros like there’s no tomorrow; whether Brazil’s offer of a tax amnesty to its tax dodgers will work; and how much longer ‘emerging economies’ and other countries left out of the reform of global tax rules will put up with it. Continue reading “The Tax Justice Network podcast, August 2015” →

New publication: The Greatest Invention – Tax and the Campaign for a Just Society

Available 24th September 2015

Available 24th September 2015

Available Worldwide, September 24, 2015 

The Greatest Invention: Tax and the Campaign for a Just Society

Continue reading “New publication: The Greatest Invention – Tax and the Campaign for a Just Society” →

Islands (the play): the conversation shifts

From the subtitle of an article in The UK’s Guardian newspaper by Caroline Horton about her play Islands, a dark skewering of tax havens which has been significantly inspired by by TJN’s work.

“The appalling reviews for our show about tax havens led me to wonder if I’d ever work again. But then the conversation shifted.”

Continue reading “Islands (the play): the conversation shifts” →

Guest post: time for a grown-up debate about corporate welfare

A guest post by Kevin Farnsworth, Senior Lecturer in Social Policy at the University of York. He recently published work on corporate welfare in the UK, which attracted a lot of attention (and some criticism.) Here is his response, which was originally posted at Speri, and is cross-posted here, with thanks.

Kevin Farnsworth

Kevin Farnsworth

The purpose of my report into, British corporate welfare, which featured in the,Guardian on Budget day, was to bring corporate welfare into the debate about the future shape of the state. The report raises questions about the role of the government in meeting, balancing and managing the needs and interests of businesses alongside those of citizens. In this respect it succeeded. But only up to a point. The noise surrounding the discussion of the size of corporate welfare got in the way of debate. Meanwhile, George Osborne’s budget made the strongest argument yet for such a debate on corporate welfare and its role and purpose within the shrinking state. Continue reading “Guest post: time for a grown-up debate about corporate welfare” →

Coming soon: the first Spanish language Taxcast

We generally don’t post non-English language articles, but this is a flyer for the launch of TJN’s first Spanish-language Taxcast, so we’ll break with tradition for this blog. An English translation is below, in any case.

Taxcast logo SpanishNuevo: Tax Justice Network (Red de Justicia Fiscal) podcast en Castellano, por favor difundir a través de todas tus redes.

Nuestro podcast mensual en Inglés “The Taxcast”, ya tiene 4 años y es transmitido y descargado en 130 naciones. Ahora queremos tu ayuda para tener un seguimiento similar para nuestro nuevo podcast en Español “Justicia Impositiva”, enfocado para todos los ciudadanos de España y Latinoamerica.

Justicia ImPositiva es un programa de 15 minutos que ofrece un análisis único sobre la justicia fiscal y la corrupción financiera. Producido por las periodistas Mónica Marchesi de Venezuela y Silvia Olmedo de España, y coordinado por la productora de @TheTaxcast @Naomi_Fowler. El primer programa se emitirá en agosto. 

Por favor apoyanos siguiendonos y compartiendo esto extensamente:

Puedes encontrarnos cada mes en youtube: http://bit.ly/1E4vV45

Twitter: @j_impositiva

Facebook: https://www.facebook.com/pages/Justicia-ImPositiva/1464800660510982

Para más información o suscribirte:

Justicia ImPositiva: [email protected]

Mónica Marchesi: [email protected]

Silvia Olmedo: [email protected]

New: Spanish Tax Justice Network podcast: please spread across all your networks

Our monthly podcast in English, the Taxcast, is now in its 4th year and is broadcast and downloaded in over 130 nations. Now we want your help in getting a similar popular following for our brand new monthly podcast in Spanish called Justicia ImPositiva, aimed at Spanish and Latin American citizens. Justicia ImPositiva is a 15 minute programme which will provide unique analysis on tax justice and financial corruption, produced by journalists Mónica Marchesi from Venezuela and Silvia Olmedo from Spain, coordinated by @TheTaxcast producer @Naomi_Fowler. The very first show will be out in August.

Please support us by following us and sharing widely:

You can find us every month on youtube: http://bit.ly/1E4vV45

Twitter: @j_impositiva

Facebook: https://www.facebook.com/pages/Justicia-ImPositiva/1464800660510982 

For futher information or to subscribe:

Justicia ImPositiva: [email protected]

Mónica Marchesi: [email protected]

Silvia Olmedo: [email protected]

Naomi Fowler

@Naomi_Fowler

Taxcast Producer

Tax Justice Network

www.taxjustice.net/taxcast

www.tackletaxhavens.com/taxcast

The ALEC rankings: does smaller government mean higher growth?

This post originally appeared at Fools’ Gold, a TJN-supported site about “competitiveness”.

There are a lot of ‘competitiveness’-related rankings of countries and states out there, from the World Economic Forum’s Global Competitiveness Report, to the World Bank’s Ease of Doing Business rankings. (We’ll address some of these in due course.) It’s interesting to note, for starters, that the highly taxed, highly regulated Scandinavian economies seem to do just as well as their low-tax, lightly regulated peers. Recently we made up a little graph to illustrate this, looking at the WEF’s ranking:

Source: WEF, Conference board. The sample of countries included those with comparable levels of GDP per capita, and excluding micro-states which often have their own ‘tax haven’ growth dynamics. The cut-off was to use states with GDP per capita (PPP) of above $20,000 on average from 1989-2013. Source: Conference Board data tables.

Source: World Economic Forum, Conference Board. The sample of countries included those with comparable levels of GDP per capita, and excluding micro-states which often have their own ‘tax haven’ growth dynamics. We used states with GDP per capita (PPP) of above $20,000 on average from 1989-2013. Source: Conference Board data tables.

There’s no obvious trend here, is there? The high-tax countries seem to be just as ‘competitive’ as the low-tax ones, it seems, even on the WEF’s measures, (which are somewhat skewed toward the low-tax, light regulation model.) The non-trend you see in this graph is just as Martin Wolf, Paul Krugman and various others would have predicted.

Continue reading “The ALEC rankings: does smaller government mean higher growth?” →