I posted this video to YouTube this morning.
In it, I argue that Tax havens are still a massive threat to the well-being of the UK, even if some of the tax abuses they promoted in the past are no longer available. It's estimated that maybe 40% of the world's dirty money - from drug and human trafficking and other crime - moves through London or the UK's tax havens, and nowhere near enough is being done to stop that. This threatens democracy itself by undermining the rule of law, and tax revenues. The government has to do more - whatever the libertarians who oppose such actions claim.
The transcript is as follows:
Offshore tax havens are still a threat to the UK, and I say that knowing that the UK is itself a tax haven.
The City of London, the financial centre which dominates the UK economy because it demands so much from the rest of us to support its activities, is itself a tax haven. That's indisputable.
I know a bit about this subject. I wrote this book in 2010. It is still the most cited academic work on tax havens in the world. I wouldn't recommend you buy it, by the way. It's out of date. I've written a lot more since, but the point is that I've studied this subject in detail now for over 20 years.
These locations - the City of London, plus all the offshore territories that we're responsible for - in particular places like Jersey, Guernsey, the Isle of Man, Gibraltar, the Cayman Islands, the British Virgin Islands, maybe Bermuda - all of these places which put the King on their stamps to show loyalty to the UK - are operating in a way that is designed to undermine the operation of democracy by denying governments the revenues that they need and to undermine law and order by providing criminals with a way in which they can launder their money.
In the last week, Andrew Mitchell, who is now the deputy foreign secretary of the UK, has said to the House of Commons that maybe 40 per cent of all the dirty money in the world - dirty money being the proceeds of crime, most commonly drug trafficking but also human trafficking, and the proceeds of other forms of crime - is laundered - turned into clean money - through the operations of the City of London or our offshore tax havens.
So, these places are literally there to undermine law and order and democracy in this country. They are a massive threat to our well-being.
What have we done about it? In 2016, when I began to cease being full-time involved in these campaigns, we got as far as requiring these places, our territories, to put on public record details of all the people who own companies in their territories, so that we could at least track who was using them to run what were previously hidden companies. But we have not made much progress since then. The territories are still not doing this and they're hiding behind European law to prevent them from doing so.
So, criminality still exists.
It is time for the UK to take its responsibilities seriously. Whatever European law says, we're outside Europe now. We should be instead pursuing the right path, which is to ensure that tax havens put not just the names of those people using offshore companies on public record, but there are the accounts of those companies on public record as well.
If we don't do that, we continue to undermine democracy because these places deliberately seek to do that by destroying the effectiveness of our tax system, and we continue to support criminality. Why would we want to do that? Why does the City of London want to do that? Why do our politicians want to support that?
I don't know. But I do know that the time for this abuse of us all to end has arrived.
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I note your comment regarding the current state of play – that 40% of the world’s dirty money moves through London or the UK’s tax havens.
For comparison, what was the situation 14 years ago? – back in 2010, what was the % of all the moneys flowing through London & the tax havens that was dirty, and what was the % of the world’s dirty money flowing through London & the tax havens back in 2010.
Little different
Apologies for the repeat.
US companies account for 25% of UK GDP. They made $88bn in profits in the UK (2019) and most/all(?) of their UK transactions go through tax havens. As Trump noted – taxing of US corporations is something the USA wants to do – not other countries.
Think that’s bad? Amazon Web Services – valued at $500bn – hosts nearly all UK gov web sites & data. Remind me how much Uk tax it doesn’t pay.
The UK – a wholly-owned subsidiary of the USA. Pathetic.
The problem is that US companies do business in the Uk, but don’t pay taxes, for all the services they “enjoy” – law n order & justice for one.
What is your data source, Mike?
IRS, but extracted from page 29 of Vassal State (Angus Hanton)
http://www.irs.gov/statistics/soi-tax-stats-country-by-county-report
Table 1A (2019 figures)
column 5 (Profit(loss) before income tax
line 154 UK
As the author notes – USA has better public stats on US companies in the UK than HMRC (who is apparenbtly coy about giving out details).
HMRC say they breach taxpayer confidentiality with any stats they can produce
Curiuously, that data only exists because I created country-by-country reporting. That still slightly amazes me…
But I do nit agree with your conclusion. Thye turnover figures suppoirt your claim but they are parts of supply chains in many cases and are not end supply data – so that the total turnover data cannot be directky related to GDP
Sorry..
A correction – it is https://www.irs.gov/statistics/soi-tax-stats-country-by-country-report (not by county)
These statistics are very depressing. The thought that I worked within such an environment for a number of years is especially depressing. I note that the government are set on pursuing everyone who takes benefits (the little people) rather than the significant proceeds of crime.
According to this government the bad guys are anyone on benefits rather than the bankers, lawyers and accountants facilitating various democracy corroding activity
The City and its supporters go on about how much they contribute in tax. I wonder how that compares with the amount lost through the tax evasion/avoidance schemes that they enable?
I’ve long seen the City, and I includes the accountants, lawyers and property sector in that definition, as a net drain on the wider economy.
Thank you, Robin.
This City worker and bankster lobbyist shares your opinion.
With regard to tax, the City’s numbers are misleading. The numbers include taxes paid by the firms / employers, employees and even contingent workers like cleaners and reception staff and security guards working for a third party contractor. The employer / firm contribution is much less than publicised.
A similar calculation is done for bonuses. To make the figures look less offensive, the firms / employers are encouraged to include all employees, contractors etc. even though many won’t get a bonus.
Having spent much of my working life working with city and other financial institutions, starting pre Big Bang, I’ve also had an inside view. As you say, their contribution is massively over stated. I’ve not seen an attempt to assess their negative impact in terms of tax not paid back into the economy. Or the impact of their endemic failure to invest (rather than speculate), chronic short termism, and malign impact on ‘real businesses’.
There are estimates of offshore tax abuse – mine tending to be higher than those by people like the Tax Justice Network, rather oddly, althoughh I would say all need to be treated with caution
They are a very necessary part of keeping the 1% wealthy. They exist as a consequence of Britains colonial history (something that must not be mentioned).
Isnt it ironic that an economic system devised for wealth extraction out of the colonies at end of empire now extracts out of the colonial centre (as well as globally) ?
But as it does so a minority in the former colonial centre (city of London) benefit from from this process of extraction whilst it drains the rest of that economy.
Extraction. Extraction. Extraction.
To coin a phrase.
I have always believed that the whole Brexit issue arose because the
EU ‘Anti-tax Avoidance Directive’ which was to be implemented by members before January 2020. Do you think we actually left the EU because this regulation would have threatened the UK’s position as an international tax haven and money launderer?
No
I don’t think it had anything to do with it
In my view there was strong support from a wide range of deregulation lobbies for brexit. There was one old regulation score to be settled (James Dyson) who promptly relocated to the far East after securing brexit! So much for patriotism eh. Money speaks.
Amersterdam has a money laundering finance system (also a former colonial power!) and it’s financial system is not threathened being in the EU.
With respect, to think that the EU would dismantle this system is naive. The EU is a conglomerate of big colonial powers and it itself wields harsh economic policies through trade and economics with poorer nations.
Not all that the EU does is good. Compared to Brexit Britain it may appear that way but we set the bar low.
This is coming from a remainer.
Why?
Perhaps, sadly, simply what would appear, from the global state of our planet, environment, politics and societies, to be humanity’s overriding existential drive – greed. Mindless, meaningless and vacuous greed.
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