The Rumble Down Under: democracy v multinationals in Australia

[vc_row][vc_column][vc_column_text]From the Australia Financial Review, via Alex Cobham:[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_raw_js]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[/vc_raw_js][vc_column_text]

This is just one part of what one might call the ‘mega-capture’ of political processes, around the world, by the Big Four accountancy firms. Continue reading “The Rumble Down Under: democracy v multinationals in Australia” →

How Swiss banks moved their evasion experts to Latin America

Stéphanie Gibaud, whistleblower

Stéphanie Gibaud, whistleblower

An interview with Swiss banking whistleblower Stéphanie Gibaud in the Buenos Aires Herald (hat tip: Jorge Gaggero). It’s fascinating. We’ll post just a couple of excerpts here, and advise readers to look at the whole thing.

For instance:

“I did public relations for the bank, which means you travel everywhere and entertain the clients so that they place their money with you rather than your competitors. The biggest part of the budget in the area I managed was to develop links with luxury networks to invite clients and potential clients in France.”

Continue reading “How Swiss banks moved their evasion experts to Latin America” →

The deep joy of trusts and foundations

We aren’t sure whether to be horrified, flattered or entertained.

Take a look at this peculiar video from a rather iffy-looking offshore promoter, complete with ’80s soundtrack and faux newsroom. If you go to the original source of this video, it turns out that they are explicitly using TJN material (from our detailed analysis of the UK-Swiss “Rubik” fiasco). For instance, they say:

Continue reading “The deep joy of trusts and foundations” →

Report: a proposal to adopt unitary tax in Israel

TJN-IsraelFrom TJN Israel, a new report entitled A Proposal to Adopt a Reform in Taxing Multinational Corporations in Israel – Unitary Taxation. The summary is here, in English, and the longer report, in Hebrew, is here.

The report explores why Israel’s existing tax regime has difficulties in combating tax evasion and avoidance by multinational companies (MNCs) and why a unitary tax approach could probably be a better solution to the existing system, which relies heavily on the ‘arm’s length’ method. Continue reading “Report: a proposal to adopt unitary tax in Israel” →

Report: parties rely on unsafe top tax estimates in UK election

Income TaxTax is one of the key battlegrounds in the UK’s general election due on May 7. No tax is more important than the income tax, and debates about the wisdom of cutting or hiking the top rate of income tax seem likely to heat up as polling nears.  Some political parties advocate raising the top tax rate from the current 45 percent, while others think that it’s a good idea to cut rates further, partly in the name of ‘competitiveness’.

Where the parties stand on top income tax rates

The Labour government increased the top income tax rate for anyone earning above £150,000 per year from 40 to 50 percent from April 2010, the first increase since 1974. The coalition government cut the rate to 45 percent in April 2013.

Current manifesto pledges are:

Now TJN publishes a major new analysis of the evidence (press release here), written for TJN by John Thompson, an independent analyst. It shows that the debates on the top rate of income tax hinge on official estimates from HM Revenue and Customs (HMRC,) which were published in 2012 and remain the baseline for judging the revenue effects. Thompson’s report shows that the figures are so uncertain as to be of little or no value in determining tax policy. Although it’s a UK-focused report, his findings are likely to have a wider relevance internationally. As we note in our press release: Continue reading “Report: parties rely on unsafe top tax estimates in UK election” →

Quote of the day – finance for development

Wikipedia's view of where developing countries are

Wikipedia’s view of where developing countries are

From Tove Maria Ryding and María José Romero, an article in The Guardian, looking at the UN’s Finance for Development process, and a high-level conference set for Adis Ababa in July:

“Finance for Development (FfD) is not a fundraising event. It focuses on systemic issues such as illicit financial flows, sovereign debt crisis, private financial flows, trade, investment and global governance. Improving these would greatly contribute to the eradication of poverty and to financing sustainable development.”

Indeed. It is an important article summarising some crucial trends now underway.

And it has a strong tax justice element. Ten years ago, that would not have been the case.

 

 

Comedian Russell Brand doorsteps Lord Rothermere over his non-dom status

Michael Winterbottom’s new film, starring Russell Brand and featuring us, gets its world premiere and goes on general release next week.  Britain’s role as a tax haven features prominently, and in the following clip from the film Brand doorsteps Lord Rothermere, owner of the stridently anti-tax Daily Mail, about his non-dom status.

This blogger watched the film’s final cut last week and rates it as excellent.  Well done to Michael and Russell for exposing the dishonesty of neo-liberal policies.  The strap line says it all: “The Truth Is, We’ve Been Sold a Lie.”

 

 

Tipping the balance: new global corporate law

xThe Transatlantic Trade and Investment Partnership (TTIP) being secretly negotiated between the USA and the EU countries is widely criticised for opening the way for powerful corporations to challenge legitimate governments and use unaccountable arbitration processes to overturn democratically agreed policies.  

Were TTIP agreed, it could be used to block changes in tax policies, such as removal of unnecessary tax exemptions.  Finance Watch cites a leaked copy of the European Commission’s draft negotiation mandate, which says the TTIP carve-out should be used

” ‘in case of serious difficulties for monetary and exchange rate policy, or for prudential supervision and taxation’. In practice, this would mean that the financial lobby could always argue that the regulations proposed are too burdensome.”

Now, in this guest blog cross-posted with permission from Lawyers for Better Business (L4BB), Adrienne Margolis comments on a new paper warning that TTIP challenges “the very essence of democracy”.

 

The law is being used to benefit political and economic elites and increasingly being skewed in favour of global corporations. What can be done?

Continue reading “Tipping the balance: new global corporate law” →

When a tax haven invokes the ‘level playing field’, run for the hills

level-playing-field

Spotted in Luxembourg, or somewhere like it

From Canada’s Globe and Mail:

“The Minister of Finance for Luxembourg says his country – labelled by critics as a tax haven for multinational corporations – is committed to sweeping international tax reforms being pushed by the G20 and the Organization for Economic Co-operation and Development, as long as they create a “level playing field.”

Which sounds so eminently reasonable. Indeed, who could oppose fairness?  Continue reading “When a tax haven invokes the ‘level playing field’, run for the hills” →

What competition in the Offshore Game?

header_tof

This week sees the launch of The Offshore Game, a project dedicated to looking at the role of offshore financial centres in sport. TJN has written about this here and here already. Now for a bit more of an overview of this emerging project.

Our first report looks at the amount of finance from offshore holding companies in the UK professional football leagues.

“How interesting is sport going to be if the competition is between the accountants and tax advisors, rather than between the players?”

In total we found 34 teams with significant offshore ownership, with a total of just under £3bn in debt and equity financing. Continue reading “What competition in the Offshore Game?” →

Veblen and Keynes comment on the UK Premier League

We’ve just written about the new Offshore Game report, covered extensively in The Guardian newspaper, and thought we’d note one of the nice little graphics about offshore ownership that The Guardian has created.  Continue reading “Veblen and Keynes comment on the UK Premier League” →

Tax Justice: A Christian Response to a New Gilded Age

PresbyterianFrom the U.S. Presbyterian Church, a report written by a former World Bank economist entitled  “Tax Justice: A Christian Response to a New Gilded Age”.

As the summary notes, it

“provides a framework for engaging in discussions about the large and growing concentration of income and wealth in U.S. society and about the tax structure as part of an agenda for addressing economic inequities.”

Continue reading “Tax Justice: A Christian Response to a New Gilded Age” →

The Offshore Game – new TJN report on offshore finance in football

header_tofFrom The Guardian, a major new story whose introduction runs as follows:

“Research by the Guardian and the Tax Justice Network reveals 28 English clubs with substantial shareholdings overseas, opening up the football leagues to criticism for allowing ownership structures that could be used for tax avoidance.”

See The Offshore Game website, and the main report, here. Continue reading “The Offshore Game – new TJN report on offshore finance in football” →

New U.S. report: Offshore Tax Havens Cost Small Businesses $3,244 a Year

From the U.S. Public Interests Research Group (PIRG):

As tax day approaches, it’s important to remember that small businesses end up picking up the tab for offshore tax loopholes used by many large multinational corporations. U.S. PIRG joined Senator Bernie Sanders, Bryan McGannon of the American Sustainable Business Council, and Bob McIntyre of Citizens for Tax Justice today to release a new study by the U.S. PIRG Education Fund revealing that the average small business owner in 2014 would have to pay an extra $3,244 in taxes to make up for the money lost in 2014 due to offshore tax haven abuse by large multinational corporations.  Continue reading “New U.S. report: Offshore Tax Havens Cost Small Businesses $3,244 a Year” →

Quote of the day – tax avoidance as red flag for investors

sugar-cubes

Tax avoidance as refined sugar: a short-term hit, with long term damage

From the Financial Times, our quote of the day:

“investors were viewing the aggressiveness of a company’s tax planning as a proxy for accounting risks and the company’s broader management style.”

Which is just as we have always said. Tax avoidance is shortcut behaviour: the opposite of building genuine long-term productive business. Or, as UK barrister David Quentin noted not so long ago:

“Tax avoidance in companies is like refined sugar in the human body – empty financial calories with adverse long-term health effects.”

Continue reading “Quote of the day – tax avoidance as red flag for investors” →

Register here for TJN’s annual discussion workshop at City University, London, 25th-26th June 2015

City

You can register here to attend TJN’s annual discussion workshop, held in association with the Association for Accountancy & Business Affairs and City University, London, which will be held on 25th-26th June 2015.

The workshop theme is Should Nation States Compete?  The outline programme is published below (it may be subject to alteration).  A fuller programme including paper abstracts is available here.

 

PROGRAMME

DAY ONE – 25th June 2015

10h00 – 10h30 Registration and coffee

10h30 – 11h00 Welcome and introductions

11h00 – 12h30 Session One
Facilitator – David Quentin
Discussant – Anastasia Nesvetailova

Matthew Watson – Ricardian Myth-Making: Comparative Advantage Theory as Ideologically Selective Historical Reconstruction

Atul Shah – Systemic Regulatory Arbitrage: the Role of KPMG

Isabel Estevez – A Minimum Cooperation Consensus for a South American Fordian Pact

12h30 – 13h30 Lunch

13h30 – 15h00 Session Two

Facilitator – Naomi Fowler
Discussant – Duncan Wigan

Filomeno III Sta Ana – Questioning Fiscal Incentives as a Policy Instrument for Competitiveness: The Case of Southeast Asia

Darian Heim – Justice, Migration, and the Competition for Talent

Ali Saqer – International Competitiveness and Economic Resilience: from Social Welfare to Corporate Welfare

15h00 – 15h30 Tea break

15h30 – 17h00 Session Three

Facilitator – Krishen Mehta
Discussant – Jim Henry

Juliette Schwak – South Korean Nation Branding and the Building of a Competitiveness Society

Jakob Engel – Regulating the Commodity Trading Industry: Comparing firm strategies to evade stricter regulation at three levels of governance

Linda Arch – Competition amongst the London Clearing Banks, 1946 to 1979

17h30 – 20h00 Film Screening

Screening of Harold Crook’s award-winning film documentary The Price We Pay, followed by panel discussion with Nick Shaxson, Jim Henry, moderated by Ronen Palan

20h00 Dinner at BananaTree

 

DAY TWO – 26th June 2015

09h30 – 11h00 Session Four

Facilitator – Liz Nelson
Discussant – Prem Sikka

Michael Tyrala – The Changing Role of the USA in the Regulation of the Offshore Economy

Duncan Wigan – The Finance Curse and Competition through Finance

Anastasia Nesvetailova – The Offshore Nexus, Sanctions Busting and the Russian Crisis

11h00 – 11h30 Coffee / tea break

11h30 – 13h00 Session Five

Facilitator – Alex Cobham
Discussant – Richard Murphy

Hagai Kalai– Back to Source: From international corporate tax neutrality to efficient investment policy and its implication for a desirable international tax policy

Matti Ylönen – Politics of Intra-Firm Trade: Corporate Price Planning and the Double Role of the Arm’s Length Principle

Diarmid O’Sullivan – Curbing tax competition: how can we get to a global consensus?

13h00 – 14h00 Lunch

14h00 – 15h30 Panel Discussion – The ‘Competitiveness’ Conundrum

Moderator – Naomi Fowler
Discussants – Will Davies, Ronen Palan, Matthew Watson

15h30 Workshop ends

Register here.

 

 

World Premiere of The Emperor’s New Clothes – 21st April 2015

Michael Winterbottom’s latest film The Emperor’s New Clothes, starring comedian Russell Brand, and featuring a range of people familiar to the tax justice community, including TJN’s director John Christensen, gets it’s world premiere in British cinemas on 21st April.

This blogger has already watched an early cut of the film and can vouch that this is a full throttle investigation into the the injustices that arise when politicians punish poor and vulnerable people by withdrawing benefits while allowing banksters and tax cheats to go scot free.

Book here to watch the special screening of The Emperor’s New Clothes with a live interview with Russell Brand.

Quote of the day – on attitudes to corporate responsibility

Jolyon Maugham

Jolyon Maugham

Our quote of the day comes from Jolyon Maugham, a UK tax barrister. Our quote of the day is the bit in bold, which is a sign of how much success we and our allies have had in changing the debates:

“Survey after survey places tax first amongst CSR concerns. Tax structured transactions are in near mortal decline. And litigating even vanilla transactions is perceived to carry prohibitive reputational risks. Yet a route to take matters forward remains elusive.

But here’s a prescription. Business needs to take the initiative. The defensive formulation – “we comply with all relevant tax laws” – will no longer do for a public inflamed on a diet of double Irish and Dutch sandwiches.

Boards need to take ownership of the tax issue. They should publish, with their annual reports, statements of tax policy. What strategy should the tax department pursue? What is the target rate of tax on corporate gains? Will the Group transact purely for tax advantages?”

Some good ideas in this last paragraph.

And now, a quote from our own director John Christensen, to illustrate just how far the thinking has moved, at least in Britain. It concerns a time when he stood up in a meeting about corporate responsibility at Chatham House in London in 2004, urged people to consider that large corporations should consider that paying tax was central to their claims of social responsibility.

“They looked me as if I’d left a dog turd in the middle of the table. When I sat down it felt like there was a 30 second silence, accompanied by looks of utter hostility from all around me. Oh boy. My knees were trembling, my blood was pounding.”

So there’s been some progress. There is plenty of grounds for continued skepticism, for sure, but progress it is.

More thinking on tax and corporate responsibility from David Quentin, here.

 

 

‘National Competitiveness’: a crowbar for corporate and financial interests

Will Davies, Co-Director of the Political Economy Research Centre (PERC), Goldsmiths, University of London

Will Davies, Co-Director of the Political Economy Research Centre (PERC), Goldsmiths, University of London

This was originally posted yesterday at the new Fools’ Gold site, which is dedicated to understanding how nations do or don’t ‘compete’.

The term “UK PLC” — the ‘PLC’ bit standing for Public Limited Company — evokes notions that whole countries behave like corporations. It is routinely trotted out by politicians in the United Kingdom: why, this FG editor even heard (and gnashed teeth at) this very term on the BBC’s Today Programme this morning, on a day when 100 UK business leaders signed an open letter suggesting that the UK must display that it is “open for business” by supplying further tax cuts and other goodies to large corporations.

Versions of these kinds of slogans, implicitly equating the interests of large corporate players with the wider national interest, can be found in most countries.

In our latest article, Will Davies asks how slogans such as these – which are intimately intertwined with notions of ‘national competitiveness’ – have managed to achieve such sway over policy-making, around the world.

Continue reading “‘National Competitiveness’: a crowbar for corporate and financial interests” →

Tax Justice Research Bulletin 1(3)

By Alex Cobham, TJN’s Director of Research

March 2015. Welcome to the third Tax Justice Research Bulletin, a monthly series dedicated to tracking the latest developments in policy-relevant research on national and international tax.

This issue looks at new papers on the responsibilities of tax professionals in respect of abusive tax behaviour and corruption; and on the parallels between the 2008 financial crisis and that of 1974. The Spotlight section considers contrasting views on tax and freedom. Continue reading “Tax Justice Research Bulletin 1(3)” →

Tax Justice Network – Changing the World

We have just put together a promotional video for TJN, to help explain our role in the fast-growing tax justice debates. We’ll place this video permanently on our home page, below the blogs, and on our Tax Justice TV page.

We have also just started soliciting testimonials from various people about TJN’s role, and this morning we  received this one, via e-mail.

“TJN has done more than any other organization to put fiscal justice at the center of the policy agenda. Tax issues should not be left to those who want to escape taxes! Changes will come when more and more citizens of the world take ownership of these matters. TJN is a powerful force acting in this direction.”

– Thomas Piketty

New report on abusive tax arrangements hurting Greece

Somo EldoradoFrom SOMO in the Netherlands:

How Canadian mining company Eldorado Gold destroys the Greek environment and dodges tax through Dutch mailbox companies

A new SOMO report reveals that Greece’s economic recovery is being undermined by large-scale tax avoidance – enabled by the Netherlands. At the same time, Greece endures harsh austerity measures imposed by the European Commission, European Central Bank and IMF which are supported by the Netherlands. Continue reading “New report on abusive tax arrangements hurting Greece” →