Beckishly conspiratorial
by digby
This is the kind of stuff that makes you feel like buying a blackboard and some puppets:
‘I would love to see tax reductions,” David Cameron told the Sunday Telegraph at the weekend, “but when you’re borrowing 11% of your GDP, it’s not possible to make significant net tax cuts. It just isn’t.” Oh no? Then how come he’s planning the biggest and crudest corporate tax cut in living memory?
If you’ve heard nothing of it, you’re in good company. The obscure adjustments the government is planning to the tax acts of 1988 and 2009 have been missed by almost everyone – and are, anyway, almost impossible to understand without expert help. But as soon as you grasp the implications, you realise that a kind of corporate coup d’etat is taking place.
Like the dismantling of the NHS and the sale of public forests, no one voted for this measure, as it wasn’t in the manifestos. While Cameron insists that he occupies the centre ground of British politics, that he shares our burdens and feels our pain, he has quietly been plotting with banks and businesses to engineer the greatest transfer of wealth from the poor and middle to the ultra-rich that this country has seen in a century. The latest heist has been explained to me by the former tax inspector, now a Private Eye journalist, Richard Brooks and current senior tax staff who can’t be named. Here’s how it works.
At the moment tax law ensures that companies based here, with branches in other countries, don’t get taxed twice on the same money. They have to pay only the difference between our rate and that of the other country. If, for example, Dirty Oil plc pays 10% corporation tax on its profits in Oblivia, then shifts the money over here, it should pay a further 18% in the UK, to match our rate of 28%. But under the new proposals, companies will pay nothing at all in this country on money made by their foreign branches.
Foreign means anywhere. If these proposals go ahead, the UK will be only the second country in the world to allow money that has passed through tax havens to remain untaxed when it gets here. The other is Switzerland. The exemption applies solely to “large and medium companies”: it is not available for smaller firms. The government says it expects “large financial services companies to make the greatest use of the exemption regime”. The main beneficiaries, in other words, will be the banks.
But that’s not the end of it. While big business will be exempt from tax on its foreign branch earnings, it will, amazingly, still be able to claim the expense of funding its foreign branches against tax it pays in the UK. No other country does this. The new measures will, as we already know, accompany a rapid reduction in the official rate of corporation tax: from 28% to 24% by 2014. This, a Treasury minister has boasted, will be the lowest rate “of any major western economy”. By the time this government is done, we’ll be lucky if the banks and corporations pay anything at all. In the Sunday Telegraph, David Cameron said: “What I want is tax revenue from the banks into the exchequer, so we can help rebuild this economy.” He’s doing just the opposite…
So how did this happen? You don’t have to look far to find out. Almost all the members of the seven committees the government set up “to provide strategic oversight of the development of corporate tax policy” are corporate executives. Among them are representatives of Vodafone, Tesco, BP, British American Tobacco and several of the major banks: HSBC, Santander, Standard Chartered, Citigroup, Schroders, RBS and Barclays.
I used to think of such processes as regulatory capture: government agencies being taken over by the companies they were supposed to restrain. But I’ve just read Nicholas Shaxson’s Treasure Islands – perhaps the most important book published in the UK so far this year – and now I’m not so sure. Shaxson shows how the world’s tax havens have not, as the OECD claims, been eliminated, but legitimised,
Read on for more context.
David Cameron really is a piece of work. He inexplicably spouted a sort of soft racism the other day in his speech in Munich and Howie quoted from Madeleine Bunting, an editor of The Guardian‘s critique:
What was so infuriating about Cameron’s speech at the weekend is that this organic street-level process of Britishness was held up to ridicule as “passive tolerance,” derided as a product of “failed policies of the past.” In a speech that excoriated “muddled thinking” it then offered plenty of its own; worst of all, it dangerously confused the distinct agendas of counter-terrorism and community cohesion. This was precisely what the all-party committee on communities and local government warned against in a report a year ago. Cameron then went on to offer a straw man version of multiculturalism as promoting segregation. Despite all the spin ahead of the speech– “bold,” “brave”– there was nothing new in his speech. We heard plenty of its kind under the last government.
Creepy. But as Howie points out, it’s a cautionary tale for Americans:
Skeptics think all Cameron was really trying to do in Germany was distract voters from his failed policies and his failure to keep his campaign pledge about cutting taxes and handing back power to local governments (his Big Society charade). Americans should follow this stuff closely; our conservative leaders– from both political parties– are headed down the same garden path.
I’m guessing it works just as well to obscure the fact that he’s legitimizing tax havens for his wealthy corporate patrons on the sly.
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