There has been much talk of late from politicians and the media – indeed – just about anyone who has a view on the much misunderstood term, ‘ tax haven ’. This is an issue that appears to have become a particular thorny issue over recent months. More particularly so since we are all suffering the dire consequences of the Western financial collapse. And, when this government’s only response appears to be to cut, cut and cut again to squeeze everyone – especially the poor and the most vulnerable until the pips squeak – as one infamous Chancellor once boasted – then perhaps the topic of tax havens was always prone to come into focus.
It is an obvious fact that this government is seeking to mop up any spare coppers it can from whichever source it thinks fit. And, what better target than the salted away billions of the filthy rich in some far away tax haven? That is what scheming politicians would have you believe is their current raison d’etre. You know the story – you know the theory. It is all a gigantic red herring of course and it is all absolute nonsense.
The term ‘tax haven’ is a much-confused phrase. A tax haven is simply a nation, or a territorial jurisdiction, which, as its principal economic activity, specialises in Financial Services with an emphasis on low taxation. In these states certain taxes are levied at a low rate or even not at all. I would have thought that is a political policy that is to be welcomed by all of us if it means that we might all be paying a little less tax and if it is employed as a key societal goal.
Surely such an aim to strive for a low tax economy would be something with which we all might feel is a reasonable policy. Indeed, I’m sure most of us would even be delighted. It should be a desirable fiscal strategy for any nation state to strive to achieve a very low taxation economy if at all possible whilst being in a position to maintain a high standard of social services and provision. In fact, I think this is a truly brilliant idea. Yet critics, or those people who simply dislike the notion of personal capital wealth in any shape or form, cry foul and huff and puff as if a low taxation system is the root cause of all that is wrong in the capitalist system of government. Low taxation married to the notion of rampant free market enterprise might even lead to an economic utopia whereby we see excellent provision for the needy in our society and jobs for all – which seems a million miles away from where we are today.
There are probably around thirty-two states, countries, territories that might be fairly described as tax havens. These places range from the better-known locations like Jersey, Switzerland and Monaco – to the lesser known like Labuan, Campione d’ Italia and San Marino. However, I would argue that any country that modifies or overhauls its tax laws to attract foreign capital into its coffers could be considered a tax haven.
I must declare an interest here. I have been a resident of tax havens myself. First, in the 1980’s, I became a resident of the Isle of Man. Latterly, I have also been a resident of the Channel Islands. Together with their obvious low taxation benefits – both are lovely places to live. Yet what many people who challenge the activities of these territories don’t seem to quite understand, or at least they like to give that impression that they don’t understand, is that many of these tax haven territories are perfectly properly regulated in terms of their requirement to adopt international fiscal compliance law. Their financial service industries are usually very stringently controlled and transparent in their fiscal dealings and they must be seen to be cooperating with exchanges of information with the various tax authorities to which they may be associated. Therefore, the majority of these so-called ‘ tax havens’ are fully compliant in accordance with current international tax law. So what is the problem?
Of course, it is true that there are a few of these territories in the darker realms of the international financial world that do not reach the “gold standard” in transparency and compliance. These rogue states together with their non-compliant practices should be closed down as far as this is possible. This could easily be achieved. All the international community simply needs to agree is to ensure that these states are completely ostracised by everyone in the regulated trading and banking world. That is always possible to achieve. And, such action should be universally supported and it would then quickly curb or stop completely their irregular activities.
But I’ll tell you what I think the problem is with our people in power on the subject of tax havens. These slippery politicians talk of bringing tax havens, per se, to account simple to appease the unrest and the anger that has been triggered by a financial strategy that persecutes hard working people and the most vulnerable in our society. The Chancellor’s economic policy has clearly failed as a general strategy to re-energise and reboot the economy despite the recent mutterings of the so called green shoots of economic recovery beginning to peep through the recessionary mist. It’s come to something when politicians wax lyrical about our economy showing a 0.6% growth ! That says it all really.
Further, such an acute strategy of grotesque economic austerity adopted by Chancellor Osborne and his using the poor and the vulnerable to pay the price of deeds of the corrupt institutional investment bankers – has been nothing short of a disaster for many of our people. This once in a multi-generation recession has hit the weakest hardest. The Chancellor has adopted an economic policy that has clearly failed – at least to date, and, there are few signs that there is any real progress of climbing out of this fiscal abyss – yet he still attacks the most vulnerable.
Osborne and his ilk have sat back and waited for things to follow the natural cycle of economics.Indeed, every reliable piece of economic data available tells us that the UK has now been in recession for the longest period since records began. Osborne has got it wrong. Yet hubris and political arrogance prevents him from changing course. This gaggle of politicians have done precious little to ease our nation back to proper economic stability and sustainable real growth.
And, whilst recessions always sooner or later come to an end – it is as if the Chancellor is simply waiting for the economic cycle to naturally turn itself around. As if he is waiting for the full circle to turn and begin to ease us all from the current economic plight we have been suffering for so long. Osborne’s philosophy says – “ things will come right one day even if this is by an invisible form of osmosis – and I will be happy to take the credit when this happens. ” And you can bet on that. The hopeless, hapless politicians will almost certainly claim that their policies have been correct all along. Osborne and his useless colleagues are that foolish to believe that we might just fall for that one.
Osborne, Cameron and Clegg, et al tell us that they will ensure that these tax havens will soon be brought to book and that they will soon be outlawed in such a way that the very rich can no longer use their tax haven services. Nonsense. This is cheap talk from cheap politicians. Whilst ever there are states and territories that legally offer a more tax efficient climate than mainland Britain, or most other countries, then this is where the very wealthy are going to park their money and their all round wealth. This is just a stark and real fact of global economic life.
Always remember – that politicians will continue to adopt the tactic of telling people that they can change this international fact of life – when the financial world knows that they can never deliver on this issue. Never. Politicians say this simply to appear to be on the side of the great majority of people. They spout such hot air rhetoric as a way to win votes and popularity – nothing more.
This slippery, sly and shallow political class have only grasped onto tax haven bashing as a means of simply headline grabbing and grandstanding in a facile attempt to appease the rest of us who are feeling the pinch of the Chancellor’s austerity driven fiscal policy. Boy George and his cronies say , ” look , I’m even chasing the very, very rich – and they will soon be suffering too. Just like the rest of us.” This is their current mantra on this particular issue.
It is all nonsense of course. Or, even worse than the pure grandstanders – there are some politicians who do actually believe in this type of Alice in Wonderland politics. Take Margaret Hodge, the Labour MP for example, on this taxation issue – this woman is truly scatty, absurdly bonkers batty as far as her understanding goes in respect of how global multinationals organise their profit centres to take advantage of international tax law. More on granny-Maggie later.
We all know that many politicians tend to live in a self-created, rarefied world. An unreal world that surrounds their own little village of Westminster in the case of the UK, Brussels in Europe and the Whitehouse in the USA. All that matters to these respective villagers is how long they can remain as residents of their particular village. Nothing else matters to them in the real scheme of things. They appear to be not of this real world.
It is a real fact of the real world that millionaires, billionaires, the hugely wealthy of any description, together with the highly profitable global corporations will always seek various methods to park their cash in territories that offer the most attractive tax efficient homes for their wealth. No government on the planet will prevent this situation. It is an act of criminal delusion for any government to pretend that they can in some way prevent this fact from happening.
In any event, despite this being a monumental lie on behalf of British politicians – what about the sheer hypocrisy of it all ? Hypocrisy in all its guises is of course an ever-present factor of politics throughout the world – but more especially in Britain. The current moral offensive against tax havens postured by British politicians is a classic example how the political system in this country is always only interested in posturing and not pursuing real, useful politics. Indeed, oddly enough, I wonder how many of the most vociferous of these zealot-like taxation moralists who have so eagerly jumped on the – “ let’s destroy tax havens ” bandwagon – have themselves invested their money in an Isa scheme of one sort or another?
The Isa schemes of course are not illegal. They are tax efficient. Indeed, the Government itself created these very schemes. They were created to minimise the tax payable on your money should you bank deposit the cash. A legitimate tax shelter as a facility that was, is and remains open to all. But, by the same argument – these Isa schemes are a form of tax avoidance. This is an undeniable fact. Clearly, there are many more elaborate schemes available to minimise taxation liability available to those individuals and corporations that seek the services of tax havens – but the principle is the same. And, these schemes are certainly not illegal if they do not contravene any tax law.
How irritating and utterly hypocritical of the likes of the crass and silly politician, that is Margaret Hodge, the Labour MP and chair of the Public Accounts Committee who tends to pop up here there and everywhere on radio, TV and spouting off in the press as she sits smugly pontificating about what an evil bunch of tax dodgers the people who use tax havens tend to be.
This remarkably stupid woman has said that Britain needs: “ a major crack down on tax havens – the bedrock of global tax avoidance.” The woman is clearly deluded on this point. Further, if I were interviewing this lady – I would want to know if she has ever invested her cash in an Isa? Now, that would be an interesting question with perhaps an even more interesting answer if she declared in the affirmative. As I say , the women is bonkers.
It is the sheer stupidity and naïve approach to these issues shown by our politicians that never ceases to amaze. It is clear to me that the only chair this particular politician that is Ms Hodge should be sitting in is the chair marked: “ “Chair of the nanny-cum-mummy-cum- Alice in Wonderland state.” I do believe this woman is either truly nuts or just perhaps plain stupid – or more likely – she is a tragic combination of the two.
In respect of many of our politicians we seem to live in an age whereby the animals are in control of the zoo. That shouldn’t surprise. We have zookeepers who are often third-rate people with tenth rate minds who seek political office in their desire to weald their distorted views upon the politically disengaged masses. Such a state of affairs we can reasonably assume will one day lead to utter disaster. A situation some might argue we have already reached.
Prudent tax planning is not, “aggressive tax avoidance ” as Hodge (Labour) and Cameron, Osborne; Clegg (the rest) would have us all believe. Tax planning and tax minimisation is sound, sensible tax planning and a perfectly sensible tax payment strategy.
Politicians have deliberately blurred the distinction between tax avoidance (legal) and tax evasion (illegal) to make it easier for them to mount an offensive against any form of tax planning. These power crazed political, self-elected elites simply want to get there their sticky, tricky , devious little hands on more of our money.
They seek ways to plunder the riches of the world’s billionaires and the planets global corporations under the guise of doing this task for the wider good of everyone. When, in fact, the very reverse is the case. Money and wealth are universally moveable products. They can be shifted around the globe at a moments notice from one tax jurisdiction to another and there is not a single thing any politician in the world can do to prevent this. Unless, of course, the world’s political elite class want to create a world where freedom of choice no longer features as a fundamental prerequisite of the people. A situation many of the world’s politicians would sincerely wish to see come to pass.
No, we should not be closing in or trying to close down legitimate tax havens. Tax havens that legally provide fiscal services for individuals and corporations in a low taxation environment should be left to carry on their business without the meddling of silly politicians from the UK. These financial centres provide a valuable and important service to those seeking a safe, transparent, fully compliant home for their money. Far from attacking these excellent financial centres -we should be doing the exact opposite and encouraging them.
Yes, I would advocate that Britain should in fact become herself the biggest, the most brilliantly attractive, well regulated, fully compliant (it’s Britain for goodness sake – what else could it possibly be) gargantuan off shore tax haven ever seen in the history of low taxation economies. And, I predict that if Britain did employ such a strategy as the key principle of its economic policy – then Boy George would be truly amazed at the trillions of pounds, dollars, yen, every currency in the world you could think of, that would come showering in to the UK from the heavens above.
It would suddenly be raining money. George would be going overboard with a capital ‘O’ from the tax paid by depositors on their invested cash. The Chancellor would be sinking in the stuff. The Treasury’s coffers would literally be drenched in cash, flooding and brimming to overflowing. All Boy George would have to do would be to implement legislation that would allow the Government to insist that these foreign deposits were being charged a reasonable tax rate to reflect the security of such a superbly safe , secure and regulated tax haven that Britain would have become. Simple.
Let’s create a gargantuan tax haven right here in the UK. This is how to do it George:
** Abolish all direct taxation on the first £30000.00 of earned income for every
citizen and for every bank deposit investor. Levy just 5% as a holding tax on
deposits of over £1million on foreign investment accounts only. See the cash
roll in.
** Scrap direct corporation tax altogether. It’s a silly tax that is very difficult to
collect. Multi-national companies can relocate their group profit centres
anywhere on the planet. Smaller UK based companies could use the money
that they would have paid in corporation tax to invest in growth and create more jobs.
** Adopt a direct rate of income tax at 10% on earned income above £30K –
£75K, 15% on £75K – £150K and 20% as a top rate tax on earned income
above £150K.
** Abolish National Insurance payments. This tax was always simply another
direct tax and a definite tax on jobs.
** Scrap fuel duty. This is a deadly tax. It stifles the economy by negatively
impacting on every area of the economy.
** Offer attractive interest rates to investors – certainly well above the
international mean average.
** Abolish business rates. This is another tax on jobs. It is also a tax that has
made ghost towns (together with greedy Council car parking charges) of many
of our former thriving town centres
** Immediately withdraw from the EU. This folly was probably the biggest
political con trick ever pulled on the British people. Improve and enhance our
trading links with all trading nations – with special emphasis on English
speaking traders together with the emerging BRIC economy nations.
** Seriously cut the foreign aid budget by 75%. Use the remainder of the budget
to fund the costs of providing aid to relieve those hit by natural disasters.
** Cap Council Tax payments at 2005 levels for the next ten years. Review 2023.
** Scrap 20% VAT on all goods save for very high-end luxury goods. Even then,
on these goods – purchase tax should be capped at 10%.
** Abolish inheritance tax for all UK born citizens. A nasty, very mean and greedy
tax – a form of double taxation implemented by tax-guzzling politicians.
** Abolish Capital Gains tax on all transactions – howsoever described.
** Abolish all so-called ‘green taxes’ – another massive con trick from the tax-
guzzling political fraternity.
** Enforce banks to lend to viable small businesses – fine them heavily if they fail
to hit pre-specified government targets in this regard.
** Nationalise those banks that are already owned by the taxpayer. Plough any
profits back into the Treasury to assist in the provision of this proposed tax
regime.
** Tax all giant (the big six) supermarkets, the Utility companies (water, gas, oil,
electric) and all communication companies like British Telecom indeed all
former nationalised industries with a special tax, say, at 45% of their net
profits. This is what the people want and deserve from these former taxpayer
owned assets
** Abolish the notion of the Bankers’ automatic bonus scheme – in all its forms.
** Abolish the BBC TV licence and replace their revenue by allowing corporate
advertising. Reform the BBC structure from the top down. Prosecute its
political liberal bias and restrict its salary payment structure for its so called
senior executives.
** How will all this be funded? By the trillions , indeed the mega trillions of investment
funds that would flood into our banks and institutions. The knock-on effect in
confidence this would bring would be enormous and very valuable – all
economies turn on the axis of confidence. This new found confidence in our
economic strategy and prospects would be very positive indeed. Further, this
low tax economy would create hundreds of thousands of jobs and foster
growth by proving the desperately needed stimulus to increase consumer
spending across the board – this is the very activity that gets a sluggish
economy ticking again.
A thriving economy can support the most solid, far-reaching and secure social services programme that protects and supports the nation’s poorest and most vulnerable instead of hammering them into the ground at every turn, as this current Chancellor appears to have done. The country could invest in its wider infrastructure and establish our nation as a visionary world leader again.
So come on George have a go. There is a blueprint for you – it’s even free of charge – guaranteed to stimulate fiscal success and the long awaited economic turnaround of our country. Fiscal success beyond any slippery politicians dreams. All you need to do is make Britain the biggest off shore tax haven in the world. Sounds good George. Even the sunny, sweltering weather of the last week or so suits the title of a ‘tax haven’. Let’s celebrate some blue-sky thinking for once George – be a real man of vision – and spoil the habit of a lifetime.
