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 Excellent: World’s Biggest Tax Haven Threatens to Expand its Operations

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PostSubject: Excellent: World’s Biggest Tax Haven Threatens to Expand its Operations    Thu Jan 19, 2017 12:59 am

“What they sell is escape: from laws, rules, and taxes of jurisdictions elsewhere, with secrecy as their prime offering.”


The UK chancellor, Philip Hammond, recently suggested that if the EU fails to budge over granting the UK market access after Brexit, Britain could transform its economic model into that of a corporate tax haven. In other words, in the event of a so-called “Hard Brexit”, which is the only option that would offer the UK any hope of self-rule in the foreseeable future, the British government would extend the City of London’s business model to the rest of the UK.

Unbeknownst to even many Brits, the “City of London Corporation” has functioned for centuries as an offshore island inside Britain, even inside London, a tax haven in its own right, as Nicholas Shaxson, author of Treasure Islands, writes in the New Statesman:

The term “tax haven” is a bit of a misnomer, because such places aren’t just about tax. What they sell is escape: from the laws, rules and taxes of jurisdictions elsewhere, usually with secrecy as their prime offering.

Provided you have fat bundles of cash, you get to enjoy rights and privileges offered by no other jurisdiction on Planet Earth. The City of London’s legal system takes US-style corporate personhood to a whole other level.

Unlike any other UK local authority, individual people are not the only voters: businesses can vote, too. Political parties are not involved – candidates stand alone as independents – and this makes an organized challenge to City consensus all but impossible. More than 70 percent of the votes cast during council elections are cast not by residents, but by corporations – mostly banks and financial firms. And the bigger the corporation, the more votes they get, with the largest firms getting 79 votes each.

Not only is the City of London paradise on earth for rights-seeking corporations; it is also the rotten, beating heart of a vast, secretive financial web cast across the globe. As Shaxson points out, each of the Web’s sections – the individual havens in the Caribbean and elsewhere (all of them Crown dependencies) – trap passing money and business from nearby jurisdictions and feed them up to the City, just as a spider catches a fly.

That Theresa May’s conservative government is considering extending this model across the whole of the United Kingdom should come as no surprise, despite the gaping hole it’s likely to leave in the government’s own coffers. After all, it is a whole lot easier for a government to build a national economic model based on undercutting the corporate tax regimes of neighboring states in a frantic race to the bottom than one based on supporting the emergence — or in the case of the UK, reemergence — of a globally competitive business sector.

But there is also a clear tactical purpose behind the UK government’s latest move. It’s the classic ruse of divide and conquer, something that Britain has long excelled at.

Right now an epic, albeit quiet, battle is being waged in Europe over who gets to set the region’s future fiscal policy: national governments, as has been the case for centuries, or the European Commission? For years, the Commission has been seeking to use the popular canard of corporate tax avoidance as justification for expanding its own powers through the homogenization of taxation rules and practices across the 28-member Union. Suffice to say, not every country is happy about it.

The Commission is even in the process of drawing up a tax haven black list — deeply ironic for an organization that is led by a man who, as prime-minister of Luxembourg from 1995 to 2013, did everything he could to frustrate concerted EU action on corporate tax in order to protect Luxembourg’s own tax regime. As the Lux Leaks scandal showed, that regime included ultra-low tax rates on corporate profits, often less than 1%.

The purpose of the Commission’s black list is clear: to set common standards for European (and perhaps even global) tax regimes and shame those that fail to make the grade into complying with them.

One country that is almost certain to make the black list is Ireland, whose low corporate tax rate (12.5%) and special tax deals have attracted many of the world’s biggest corporations to set up mailbox offices there, which have in turn attracted the opprobrium of the EU’s growing army of tax inspectors.

Last year they slapped Apple with a €13 billion retroactive tax bill, apparently owed to the government of Ireland, its decades-long partner in one of the biggest tax-avoidance schemes of living memory. The Commission argued that the arrangements represented illegal state aid. Ireland’s finance minister Michael Noonan warned that the Commission, with the support of both Germany and France, is “opening a back door through state aid to influence tax policy in European countries.”

But not everyone’s on board. Countries like Austria, with its chronically opaque banking system; the Netherlands, a fiscal paradise that is second home — albeit in the form of a mailbox — to 48% of the Fortune 500; Luxembourg; and, of course, Ireland, will hold as fast as they can to their current tax models. A couple of months ago Hungary’s government raised the stakes by unveiling plans to cut its corporate tax rate to 9%, significantly lower than Ireland’s 12.5%.

The race to the bottom is already on. The fiercer it becomes, the more damage it risks doing to European unity on fiscal matters. By announcing that it, too, is considering becoming a corporate tax haven, the UK, Europe’s third largest economy, just put the cat among the pigeons.

http://wolfstreet.com/2017/01/18/uk-to-become-tax-haven-like-city-of-london-worlds-worst-tax-haven/
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PostSubject: Re: Excellent: World’s Biggest Tax Haven Threatens to Expand its Operations    Thu Jan 19, 2017 5:15 pm

Quote :
and shame those that fail to make the grade into complying with them.

:nosale:
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PostSubject: Re: Excellent: World’s Biggest Tax Haven Threatens to Expand its Operations    Thu Jan 19, 2017 5:20 pm

Better than good
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