If you think that cutting the 50% income tax rate by 5% for the super-rich on more than £150,000 a year was the worst thing that Osborne has yet done, think again. He is just about to give £multi-billion trans-national companies a tax cut from the current 23% to just 5.75% on the internal financing operations of their subsidiaries based in tax havens. This is a colossal tax bonanza for virtually all Britain’s top companies, since 98 of the FTSE-100 have subsidiaries in tax havens. It is breathtaking that both Cameron and Osborne can denounce tax avoidance as ‘abhorrent’ and ‘morally repugnant’, yet at the same time dole out such enormous cuts in tax to some of the biggest, richest companies in the world that it’s hardly necessary for them to go to the trouble of avoiding tax at all.
I have to admit that when I read a few months ago that Lord Fink, the then Tory party treasurer, has lobbied Osborne in 2008 to lower company taxes so that they could compete on a level playing field with tax havens where hardly any tax is paid at all, I thought it was some kind of bizarre black humour. It’s like saying why don’t we suspend the property laws in some parts of the country so that we can compete on equal terms with the burglars. Instead of putting the tax havens out of action by threatening to outlaw their financial transactions unless they fully co-operate with mainland governments’ tax regimes (which is entirely practicable since most tax havens are Crown Dependencies or UK Overseas Territories), the Tories are showing their true colours by siding with the big-time tax avoidance crooks and making ordinary working families fill the gap either with tax increases (VAT) or spending cuts.
The Treasury, which is supposed to be short of money not least as the budget deficit is still widening, declares that their tax receipts will fall by £1bn a year. Since the biggest 30 companies alone have over 3,000 subsidiaries located in tax havens, this must be a huge under-estimate. Even worse, developing countries, many of which have a majority of their people still subsisting on less than 42 a day, are expected to lose a further £4bn in tax revenues from UK multi-nationals as they move even more of their operations offshore.
Notoriously Leonora Helmsley, the New York heiress, once said: “Taxes are only for little people”. Clearly this ultra-right Tory party, which never won the election and has no mandate for such unscionable financial extremism, takes the same view. This is government of the rich, by the rich, for the rich.