G20 should aim tax avoidance rules at the banks & super-rich

The latest OECD draft rules to regulate massive corporate tax avoidance are a real advance so long as the 44 countries concerned (90% of the world’s economy) stick to their resolve, push these measures through and resist the enormous lobbying that they can expect from a determined corporate push-back. But the past record on that is not good, and in particular Osborne is already threatening to break ranks in a manner totally discordant with all the other participants.

The new regulations should at last stop companies exploiting differences between tax regimes to achieve artificial tax avoidance on an industrial scale via what are called hybrid mismatch structures. Other draft rules will require multinationals to give tax authorities a country-by-country detailed breakdown of their activities and earnings, so that they will no longer be able to carry out their operations in high-tax countries but then artificially register their profits for tax in low or virtually no tax countries. Continue reading

Far from blocking tax avoidance, the Tories have made the UK a tax haven

The Guardian revelations about the receipt of donations and tax arrangements of Andrea Leadson, Osborne’s junior Treasury minister, raise again the murky influence of Tory money on British politics via such devices as family trusts, non-dom arrangements, offshore mortgages, and employee benefit trusts. But that does not reveal the real scandal, namely that so far from cracking down hard on tax avoidance in all its multi-headed forms as Osborne likes to boast, he has actually allowed a multitude of avoidance mechanisms to persist untouched and has even made the UK itself into a tax haven. Despite all the sanctimonious condemnation of tax avoidance, Osborne has been regularly adding aggressive tax breaks to the UK tax code. 

The most egregious is the ‘patent box’. This offers companies that introduce a patent, even one that is insignificant to the broad operations of the company, a reduction in corporation tax from 23% to 10%. This idea of giving tax breaks to intellectual property-owning firms was attacked last year by Osborne’s German counterpart, Wolfgang Schauble, on the grounds that the UK is “doing it just to attract companies” which is of course entirely correct by giving the UK the characteristics of a tax haven. Continue reading

One rule for benefit claimants, another for the tax avoiders.

The latest figures collected by Oxfam indicate nearly a million persons have been ‘sanctioned’ (i.e. deprived of all benefits for a month for the first infringement, often trivial, for 3 months for the second, and 3 years for the third) in the last 15 months and that the numbers using foodbanks are now well over half a million.

Yet bankers are still leading the life of Riley at the public expense without any being brought to book. Barclays under the so-called Jenkins ‘clean-up’ act has just stunned even the City by increasing bonuses by by 10% despite profits collapsing by 32%. Continue reading

International crackdown on tax avoidance gathers momentum, but UK drags its heels

The EU Commission has today outlined its attack on the artificial hybrid structures used by multinational companies to reduce or entirely avoid their tax liabilities. Three companies – Tate & Lyle (sugar), FirstGroup (transport) and Linde (industrial gases) were specified as saving as much as $150m a year by lending billions of dollars to their own US subsidiaries and then exploiting legal differences between the US & UK to offset the interest payments against tax both in the US and the UK.

The hybrid structures work by inserting a new UK subsidiary, which typically has no employees, into the company’s US group. The new entity is then lent large sums by another British subsidiary, resulting in both interest payments and receipts in the UK. Continue reading

This is how to enforce tax transparency & prevent tax avoidance

After 4 hours of massive Tory filibustering to prevent my bill being reached, I finally got a brief chance to make the case for ending tax avoidance and enforcing tax transparency on the richest individuals and the biggest companies:

Michael Meacher (Oldham West and Royton, Labour)

Tax avoidance and financial transparency, or perhaps I should say the lack of financial transparency, have of course been high on the Government agenda for the past two years. They even led Prime Minister to make tax transparency and trade his central international focus at the G8 at Lough Erne in June. However, having marched his troops up the hill, rather like the Grand Old Duke of York, the Prime Minister has since proceeded to march them down again. Rather little of significance—that is being generous—has happened on the tax and transparency front since then. Continue reading