While the government is moaning on about scroungers and cheats and reckon that working in dead end jobs for £5 an hour is enough to live on, they don’t seem so keen on chasing the rich for their taxes.
It’s not just top media tycoon Rupert Murdoch who pays virtually no tax thanks to his use offshore tax havens: Neo Labour donor and third richest man in the world, Lakshmi Mittal, worth £13bn, owns a £57m London home next to Kensington Palace but by claiming the UK isn’t his primary residence, pays bugger all tax, and also avoids capital gains tax on UK assets by holding them in a foreign company or trust. The business empire of retail billionaire Philip Green is mostly held in the name of his wife, Tina, who is resident in Monaco. Taveta Investments, the vehicle used to acquire Arcadia in 2002, paid out a hefty £460m to its owner last year; Green, who spends much of his time in Britain, would have been landed with a £150m tax bill if he officially owned Taveta but as it's held by the missus, a minuscule amount of tax is due.
What these super rich are doing is perfectly legal – you see they can afford to employ accountants to move their money about in clever ways to avoid tax. The rest of us see our wages taxed at source and the closest we get to tax avoidance is a day trip to France to stock up on booze and fags.
It is reckoned that the world’s super rich are hiding $11.5 trillion in tax havens around the world (10 times Britain’s GDP). The annual income that these assets earn is $860bn and taxable income from this could exceed $255bn. And that doesn’t include the trillions held in overseas accounts for multinational corporations; offshore companies of this type are springing up at the rate of about 150,000 a year. Whereas in the 1970s there were just 25 tax havens, now there are at least 63, about half of them British protectorates or former colonies. Tax avoidance in Britain alone is estimated to cost the Treasury between £25bn and £85bn a year.
The rich stashing away cash is nothing new, but the gulf between the haves and the rest of us just gets wider and wider. “This is one of the defining crises of our times,” reckons John Christensen of the Tax Justice Network, “One of the most fundamental changes in our society in recent years is how money and the rich have become more mobile. This has resulted in the wealthy becoming less inclined to associate with normal society and feeling no obligation to pay taxes.”
George Gelber, head of public policy at Catholic aid agency Cafod, says: “The people who use tax havens are free-riders on the taxes paid by working people round the world. They pay little or nothing for public goods such as the rule of law and security, which have to be paid for by the taxes of much less well-off people.”
lrb got this guy saying it how it is
With advice from Ernst & Young, directors of a major phone company paid themselves in gold bars and fine wines to avoid paying UK income tax and national insurance contributions (NICs). No sooner had the government plugged this loophole than the firm devised another scheme, which enabled its clients to pay directors salaries and bonuses through an elaborate offshore "employee benefit trust" and avoid UK income tax and NICs. The scheme is estimated to have been copied by 500 companies to avoid paying an estimated £1.5bn in taxes and NICs. The House of Lords has now ruled that the scheme was unlawful.
gold and fine wines hey? Accountants: a threat to democracy erm democracy? nevermind
'Be fair' plea as tax loopholes targeted