Industrial scale tax evasion and avoidance is not only symptomatic of the insatiable greed of the hyper-rich and the over-mighty corporations, it also serves another purpose which is much less recognised. The touchstone of the neoliberal ideology is globalisation – let the markets be all-powerful and governments get out of the way. That is served by light-touch (i.e. minimalist) regulation, blind trust in free markets, and the unfettered mobility of capital. But it further demands that the state should be kept deprived of adequate funding so that its capacity for intervention is short-circuited. That is exactly what widespread tax evasion/avoidance achieves. A state starved of tax revenues – even HMRC admits it loses £35bn a year on tax scams, though Richard Murphy of Tax Justice Network argues it’s nearer £120bn a year – cannot deliver the goals of social democracy which a majority of the electorate desire. Increasingly the government falls prey to the markets even to raise its own revenues. Continue reading
Tagged with Corporate Taxation
The great Spanish corporate tax dodge
Spain’s biggest companies have greatly increased their presence in tax havens, with the number of subsidiaries established in these tax-lite territories up 44% during 2013, the worst year in the country’s economic crisis.
The IBEX35 companies upped the number of branches in tax havens from 561 to 810 during that year, new research finds.
Financial flows to tax havens – from Delaware and Jersey in the US The Netherlands and Ireland, to Luxembourg, Switzerland and the Cayman Islands – account for 24% of total Spanish foreign investment, through a transfer of capital between subsidiaries ( activity that amounts to about a quarter of overseas investments by Spanish companies. ) Continue reading
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Cut corporate welfare not people’s welfare
Corporate welfare has been estimated in a University of York social policy study to cost British taxpayers nearly £85bn a year. That is not far short of the current level of the entire budget deficit which is still £100bn. If industrial-scale corporate tax avoidance were added in to the corporate welfare state, the cost to Britain would comfortably exceed the whole deficit.
So instead of focusing on £25bn (unspecified) further benefit cutbacks and a further huge squeeze on departmental public services bringing their cumulative cutbacks since 2010 to a staggering 40% or more, Osborne might be well advised to look at where money is truly wasted. Continue reading
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Cameron’s brouhaha on corporate tax avoidance: but does he really mean it?
Given the government’s media blitz over the last few days you might be forgiven for thinking that Cameron was about to pull off a coup in cracking down on corporate tax avoidance at the G8. We shall see. This is a case where it pays to read the small print. Ostensibly he is trying:
- to get UK-controlled tax havens to sign up to a OECD agreement on providing tax information,
- to establish a worldwide standard on automatic tax information transfer,
- to get G8 countries to reveal the identity of shell companies, and
- to help developing countries get their rightful entitlement to tax
All perfectly desirable objectives, but fraught with caveats.
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Labour is failing on tax avoidance
This week’s YouGov poll for the Sunday Times makes it very clear that Labour is failing to get a clear anti-tax avoidance message across to the public. In answer to the question “In general, do you think it is acceptable or unacceptable to LEGALLY avoid paying tax?”, 62% of people (72% of Labour voters) think it is “unacceptable to legally avoid tax” versus 29% (20% of Labour voters) who think it’s acceptable. And yet only 50% of Labour voters and 21% of all voters think Labour is the party “would do the most to cut down on tax AVOIDANCE?”.
Whilst it is true that the Government has attempted to talk the talk of tax avoidance, the reality is very far removed from the talk as their squalid deal with Switzerland, which Richard Murphy described perfectly: Continue reading
