The budget: well, at least Hammond will be ok

“… Hammond is one of Parliament’s richest MPs with a net worth estimated at £8.2million in 2014.

He made much of his money after setting up housing and nursing home developer Castlemead in 1984.

He still benefits from a trust that controls the firm, alongside his £143,000 salary for being a minister and MP.

But he refused point-blank to publish his tax return – leaving it difficult to estimate what he’s worth now. …”

http://www.mirror.co.uk/news/politics/who-philip-hammond-what-net-11560679

“Why do people care more about benefit ‘scroungers’ than billions lost to the rich?”

Last year’s British Social Attitudes survey asked Britons about their feelings on this issue. Our analysis of this data (with Ben Baumberg Geiger of the University of Kent) revealed that the British public believes tax avoidance to be commonplace (around one third of taxpayers are assumed to have exploited a tax loophole). In moral terms, people seem rather ambivalent; less than half (48%) thought that legal tax avoidance was “usually or always wrong”.

By contrast, more than 60% of Britons believe it is “usually or always wrong” for poorer people to use legal loopholes to claim more benefits. In other words, people are significantly more likely to condemn poor people for using legal means to obtain more benefits than they are to condemn rich people for avoiding tax. This is a consistent finding across many different studies. For example, detailed interviews conducted by the Joseph Rowntree Foundation in the wake of the 2008 financial crisis found that people “tended to be far more exercised by the prospect of low-income groups exploiting the system than they were about high-income groups doing the same”.

This discrepancy is reflected in government priorities. Deep public antipathy towards benefit “scroungers” has been the rock upon which successive Conservative-led parliaments have built the case for austerity. Throughout his premiership, David Cameron, along with his chancellor, George Osborne, kept the opposition between “hardworking people” and lazy benefit claimants right at the centre of their messaging on spending cuts. Though gestures have been made towards addressing widespread tax avoidance by the wealthy, very little has actually been achieved. This stands in stark contrast to the scale and speed with which changes have been made to welfare legislation.

Will the Paradise Papers shift the public’s focus? The leaks alone are seemingly not enough. The 2016 British Social Attitudes survey was conducted just four months after the release of the Panama Papers. Even then, the British public remained more concerned about benefit claimants than tax avoiders.

…”

https://www.theguardian.com/commentisfree/2017/nov/15/benefit-scroungers-billions-rich-paradise-papers-tax-avoidance

UK politics and corruption – it’s not (only) “Johnny Foreigner” to blame

This article, written in December 2016, foresaw developments this week. We have had the warnings, but where is the path to change when all the paths are obstructec by the corrupt?

“… Our media likes to write about crime and corruption as though they are the funny fetishes of Johnny Foreigner: Italian mafia, Russian oligarchs or Mexican drug lords. But this year alone, the former banker and anti-corruption campaigner Roman Borisovich made the claim that three-quarters of the money looted in Russia comes to Britain, the Italian mafia expert Roberto Saviano described the UK as “the most corrupt place on earth”, and our biggest bank was sued for its involvement in laundering Mexican drug money: appropriate, given than HSBC was founded by criminal drug dealers on the back of the Opium Wars.

This racket is big enough to have vast control over our politics. An enterprise dogged by criminal charges can pay to hush up the nation’s biggest broadsheet. It’s hard to look at party funding in the last two UK general elections without concluding that it was the donations of the financial sector and prominent tax dodgers which put David Cameron into Downing Street twice to ensure that they weren’t regulated after the 2008 crash.

And it’s not just the Tories. After trade unions, the biggest ‘donors’ to the Labour party before the 2015 elections were the accountancy firm PricewaterhoueCooper, who ‘gave’ in the form of £600,000 of research ‘help’. Then shadow-chancellor-now-TV-dancing-supermo Ed Balls effectively outsourced £200,000 worth of policy work to these much criticized wizards of tax accountancy for the mega-rich, while shadow business secretary Chukka Ummuna got £60,000 worth of ‘support’.

Not wanting to miss out on the action, the Liberal Democrats accepted 1371 hours of policy ‘technical support’ from PwC in 2015 alone, the year after the Luxemburg Leaks revealed the firm’s significant involvement in helping the hyper-rich slash their tax bills through complex accounting arrangements. It’s worth pondering on who wrote the maze of loopholes into the laws in the first place…

Once they leave office, the deal only gets better for our prominent politicians. Former British foreign secretaries like Malcolm Rifkind, Jack Straw and David Miliband have auctioned access to themselves for huge sums of money. Former British health secretaries like Alan Milburn, Virginia Bottomley and John Hutton have all quietly slipped from government into the private healthcare sector, and now make millions of pounds between them cashing in on NHS privatisations they (and their cousins) pushed through. Former British Chancellor George Osborne has seen his best man’s firm rake in £36 million from his bargain-basement privatisation of the Royal Mail. Former British prime minister Tony Blair used the links made in office to secure vast sums of money running round the globe as a lackey for the violent royal dictators of the United Arab Emirates, and working as an advisor, lobbyist and spin doctor to a cast of characters including Nursultan Äbishuly Nazarbayev, the dictator of Kazakhstan and Aleksandar Vučić: once Slobodan Milošević’s Information Minister, now Serbia’s prime minister.

Our country is represented in the world by a trade minister who was previously sacked as defence secretary for allowing a businessman funded by companies which “potentially stood to benefit from government decisions” to sit in on at least 40 meetings and a foreign secretary whose time as London Mayor included overseeing property deals described by the former chairman of the government’s Committee on Standards in Public Life as “having the smell of semi-corruption” involving large donations to the Conservative party. Do either of them have an eye to the second career profits of their predecessors? We’ll have to see.

And those who wish to buy influence get their way. David Cameron promised “no ifs, not buts, no new runways” at Heathrow. Theresa May came out publicly against the scheme. Boris Johnson and Zac Goldsmith both tied their reputations to their opposition to it. But it is going ahead, costing the Tories an MP and a bucket of political capital across marginal seats in West London.

It seems to me that there is a simple explanation for what would normally be seen as an astonishing act of political self-harm: as the organisation 10:10 puts it: “15% of the population took 70% of all flights in 2014. People in that 15% group earn more than £115,000 a year. They tend to have a second home abroad. And their most popular destinations? Tax havens.[1]” The third runway only makes sense if seen from the top of the towers of Canary Wharf. But in Britain, that’s the view that matters.

The scar of living in a country run by and for the rich is marked by more than a runway, though. Even if you ignore the vast quantity of wealth hidden in tax havens, Britain is the sixth most unequal country in the OECD, after Chile, Mexico, Turkey, the USA and Israel. This is a level of inequality of the scale that tears whole societies apart; or is only possible in places that have already been rent asunder: three of those countries have governments at war with their own citizens; and the USA just elected Donald Trump.

By some measures, the UK has nine of the ten poorest regions of Northern Europe, while London is the richest. We produce 18% less per hour worked than the G8 average, and real wages have fallen 10.4% since 2007: a figure only matched across the OECD by Greece. Children in England are among the least happy in the world, and in 2013, the UK was criticised by the UN for a mortality rate among under 5s that’s higher than in countries including the Czech Republic and Slovenia. Meanwhile, the bonfire of the London housing market sucks in ever more of our cash, ensuring the nation’s wealth is squandered on making homes in the most expensive city on earth ever-more expensive, rather than investing that capital in anything productive.

For those of us who seek answers to serious questions about how to build a just, sustainable economy in this archipelago, one of the first questions must surely be what vehicle we have to do this through. And whilst government is certainly necessary, the ancient British state; built to run an empire, seems utterly unfit for the purpose. Without the modifying influence of the EU, though, it’s all that England is left with.

In this context, any conversation about tax in Britain must include a thought about the constitutional position of our tax havens. Any discussion of regional inequality has to look at the vast centralisation of power in our supposedly sovereign parliament. Any talk of financial regulation has to ask why the City can have such vast influence within our politics. Any look at income inequality must also survey inequalities of political reach. Because once you accept that the state has a decisive role in our economy – and it does – you need next to ask who runs that state, in whose interests, and how that can change.

In 2016, millions of British people voted to leave the EU because they wanted to ‘take back control’. The remaining question, then, is a simple one: to whom will that control be returning? Will it be the same ruling class, using the same holes in the same wood-wormed constitution to squirrel away wealth and power and plunder the country like they plunder the planet? Or will the process force us to realise that Britain’s problem aren’t the fault of foreigners from whom we can escape; but come instead from our own failure to free ourselves from Medieval subjecthood, and fight for real democracy?

[1] This research was done by the Tyndall Centre, using the PwC list of tax havens.”

https://www.opendemocracy.net/neweconomics/britain-is-not-what-it-thinks-it-is/

“Private equity firm made struggling care home operator take costly loan”

“Britain’s second biggest care home operator was made to borrow money through a very expensive loan from its private equity owner in a deal designed to extract £890m in cash from the struggling business.

The disclosures are likely to raise fresh concerns over the future of Four Seasons Health Care, which operates more than 300 care homes across the UK, and has been drowning in debt.

Described in reports as teetering on the brink of ruin, Four Seasons has been hammered by cuts to council care budgets brought on by years of austerity. This month, its private equity owner, Terra Firma, will plead with lenders to approve a financial rescue package.

However, filings in the tax haven of Luxembourg and data from the Paradise Papers reveal how Terra Firma hoped to make a vast profit from the business after acquiring it in 2012.

Four Seasons was made to borrow £220m from Terra Firma subsidiaries. The repayment terms were huge – 15% interest a year, on a compound basis, over 10 years. By 2022, when it was due to be repaid, Four Seasons would have owed its controlling shareholder four times the original sum.

The debt was later written off because of the financial struggles at Four Seasons. However, the bond stated a nominal repayment value of £890m. The intention seems to have been to extract profits from any future sale of the business largely tax-free – a manoeuvre that will raise concerns about whether buyout groups are suitable owners for businesses that form a key part of Britain’s care infrastructure. …”

https://www.theguardian.com/news/2017/nov/08/private-equity-terra-firma-care-home-four-seasons-loan

Direct v. indirect investments in offshore trusts – 50 shades of grey?

Downing Street confirmed yesterday that the prime minister did not have any direct offshore investments and that her assets were held in a blind trust, which is regarded as customary practice for ministers.

Er, sorry, no “direct” offshore investments?

So, she has “indirect” offshore investments then?

Do companies her blind trust invests in have direct or indirect offshore holdings?

More questions than answers!

‘Paradise Papers: Theresa May refuses to promise register of offshore trusts’

Offshore investing allows companies to avoid paying tax in the UK and is not illegal. Theresa May says she does not intend to change this so that it becomes tax evasion, which is illegal.

One can only assume that her investment banker husband has given her his professional advice.

Though:

“After his wife Theresa May, now the British Prime Minister, emerged as the only remaining candidate for the Conservative party leadership, his employer issued a statement saying that his current job does not make him responsible for investment decisions: “he is not involved with, and doesn’t manage, money and is not a portfolio manager. His job is to ensure the clients are happy with the service and that we understand their goals.”
(Wiki)

“Their goals”, right …

Guardian :

“Theresa May has refused to commit to a public register of the ownership of offshore companies and trusts in the wake of the Paradise Papers revelations but said new measures were already creating more transparency. …
… Corbyn called for a full public inquiry into tax avoidance and evasion, as well as a new tax enforcement unit at HMRC.

“Please understand the public anger and consternation at the scale of tax avoidance revealed yet again today,” he told the annual gathering of business leaders. “We are talking about tens of billions that are effectively being leached from our vital public services by a super-rich elite that holds the taxation system and the rest of us in contempt.

“We must take action now to put an end to this socially damaging and extortionately costly scandal.”