REVEALED: WHY OSBORNE THE ‘CRACKDOWN ON CORPORATE TAX EVASION’ CHANCELLOR IS REALLY COMPETING WITH LUXEMBOURG

osbeanGideon Oliver Jean-Claude Osborne-Juncker

British Chancellor George Osborne told BBCNews today he is hopeful of a “win-win” agreement between the UK and the rest of the European Union in talks over its future membership. Mr Osborne said there was “goodwill and a willingness to engage” with British arguments. In asserting such things, he is as usual lying to the British People – as he did about his tax strategy prior to the Election. There is no such willingness at all, because the Chancellor is trying to have his cake and eat it with the EU when it comes to taxing multinational evaders. The Slog deconstructs the two faces of George Osborne.

What follows is an account of what happens when a government is working for a few privileged people, rather than The People. Here’s the official HMRC version on business taxation – as dictated by George Osborne before this year’s UK General Election:

‘…this government has been relentless in its crackdown on tax evasion and avoidance….[but]…Most individuals and businesses in the UK pay the tax that is due and do not try to bend or break the rules to avoid it….’

The truth is somewhat at odds with the Chancellor’s assertion. While most UK-derived and owned businesses pay all their taxes, multinational corporations don’t: an HMRC report from two years ago calculated that at least 1 in every £8 is lost to tax evasion by global combines who hire legions of accountants to weasel and wriggle in the reduction of client tax costs.

But that HMRC estimate of 13% being lost (nearly £5bn per annum) doesn’t include the far greater dent in tax takes caused by multinationals shifting their money around in a cross between musical chairs and a Ponzi scheme. Experts reckon this loss may be around £12bn a year. The main culprits here – the likes of Google, Amazon and Starbucks – do not suffer crackdowns…or anything remotely like that. Amazon for instance, pays about one 0.1% of the tax on UK-generated that it should do. The rest is avoided by having a head office in Luxemburg – where are old friend Jean-Claude Juncker rules the roost.

Nondoms working in City banking firms are no different: they work here, get the advantages of our transport, education and health systems, but somehow feel they have the right not to contribute to the society in which they earn vast sums. When challenged about this, Ministers spout claptrap about “being seen to be open for business”. Worse still, to keep on the right side of the City goosesteppers laying golden eggs (since 2008 they’ve cost us £1.1bn in rescues and liabilities) undervalued social weal public assets like Royal Mail get sold off at undervalued prices.

Specific cases of cronyism between political Parties and tax avoiders come to light disturbingly often. The oil trading company Vitol has kept its tax rate very low in the UK (where the trade largely occurs) by having a head office in Geneva. Although it’s another case of using British resources but shying away from the bill, what raised many eyebrows was the fact that its CEO Ian Taylor is a major donor to the Conservative Party.

This hardly counts as ‘relentless in its crackdown on tax avoidance and evasion’, and since being returned to power in its own right, the difference between what the Conservative Party says and does on taxing the Big Boys has become even more marked. Just five weeks after the election, Britain rejected Brussels proposals for a coordinated plan (CCCTB) to combat mass tax evasion by multinationals based in the EU.

In an extraordinary statement, financial secretary to the Treasury David Gauke told the media that he saw ‘no relevance to the UK’ in the plans, and that under no circumstances would the UK adopt the measures proposed.

This is where the Tories’ tax hypocrisy must surely raise questions in the Opposition, such as it is, in Britain. Because what’s clear is that under Cameron and Osborne, the country is being positioned as a sort of tax haven among globalist business, in order to attract more multinational offices, factories and distribution centres.

Now one can hardly crack down and be a sort of Luxembourg at one and the same time. But on addressing representatives from the European Parliament, the Minister specifically said (quote) “it is very important to have competition between tax regimes”. Further, Gauke told the FT: “The CCCTB has been around a very long time. It is a proposal still looking for a justification.”

What’s now becoming clear is that the Chancellor has been selling a pro-citizen, crackdown-on-corporate-evaders tax approach to the British electorate, while pursuing a pro-business low tax régime undercutting the EU to the multinational corporate sector. He has, for example, laid great stress on slashing the headline corporate tax rate from 28% to 20%. But it is not just on the rate that Osborne has competed hard: new favourable tax regimes for multinationals with offshore financing subsidiaries as well as new tax breaks for patent-owning companies have also been central to an aggressive tax competition policy.

This is being reflected in multinational HQ trends in relation to Europe: Aon, Fiat Industrial, and Starbucks Europe now have headquarters here, and Monsanto has announced that, should it succeed in taking over Swiss firm Syngenta, it will also move its headquarters to the UK.

But as we have seen, having attracted the more ‘fly’ corporations to Britain (and they don’t come more fly than Starbucks and Monsanto) the HMRC is still missing out on a huge proportion of the tax due to it from such companies. It has, in reality, given up on catching the real tax dodgers.

Instead, the Conservative Party has chosen to lay all blame for Britain’s parlous fiscal state at the door of those on low wages with poor access to affordable support.

This essentially corporacratic government has chosen to cater for the 3%, not the rest of us. It has chosen to pauperise the squeezed, in preference to catching the globalist evader. It has chosen to blame the poor, not tax the rich.

And yet, it prefers to stay in an increasingly controlling European Union, but not join in with that Union’s goals….rather, to be devious with it, and to confuse it by being somehow in yet out. Those of us who just want out think this is a muddled policy, but as usual with the Conservatives it’s more a case of opportunism than clarity: the UK government wants privileged access to European markets, but not to have its tax and financial services leadership threatened.

Twas ever thus: those with double standards always want double helpings.

30 thoughts on “REVEALED: WHY OSBORNE THE ‘CRACKDOWN ON CORPORATE TAX EVASION’ CHANCELLOR IS REALLY COMPETING WITH LUXEMBOURG

  1. And talking of double helpings, France is next on the agenda apparently….
    ‘Greece news live: explosive Varoufakis recording leaked, former minister says France ‘terrified’ of Berlin’s austerity demands
    Audio recording of Greek plans for a parallel currency are revealed after former finance minister says Germans used Grexit to “terrorise” the French’
    http://www.telegraph.co.uk/finance/economics/11764792/Greece-news-live-explosive-Varoufakis-recording-says-Paris-is-terrified-of-Berlins-demands.html

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  2. John, what these multinationals are up to is tax avoidance, not tax evasion. There’s nothing illegal about it. The companies are merely taking advantage of loopholes and slack legislation which governments could easily plug, should they choose to do so. Corporate taxation is, potentially anyway, a major cost to companies, and if the directors of these companies don’t make their best efforts to avoid paying it, they are not fulfilling their fiduciary duties to their shareholders, their companies are likely to lose out to others whose directors *are* doing their best to avoid this taxation, and the directors of the non-avoiding companies are putting their careers at risk.

    Governments have it within their power to make the search for multinational tax avoidance a futile and fruitless exercise. Don’t blame the companies for what’s going on – blame the politicians for creating the circumstances where it is a commercial necessity for it to go on. ,

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  3. All this as problem of UK tax avoidance and the cost of ever more admin (highly paid) to try to control other (just as highly paid) admin who are trying to find loopholes in the current rules does make me wonder as alternatively taxation on direct consumption rather than income (ie just VAT instead of Income Tax & NI & lots of others)’

    I’m certain there are a lot of problems with the idea, but there also with current way of doing it

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  4. Following that ” leaked” interview Varoufakis has clarified his formal position on his website this morning on the fear that he might now be manipulated by his internal enemies into facing a charge of ” treason” ( in Greece)……..

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  5. Please don’t equate Starbucks with Monsanto – whatever else their sins, at least Starbucks are not blithely poisoning populations, unless they’re putting something in their coffee we don’t know about.

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  6. These ‘loop holes’ are nothing of the sort they were deliberately manufactured ways to avoid tax put there to assist friends and donors of the political parties. Now someone is shining light into the musty corners of a hugely over complex tax code. Ideally, the entire edifice should be deleted and a new tax code written that should not exceed 10 pages in12 point. If any amendments are required then the 10 page and 12 point requirement remains so something needs to be removed. The HMRC could then be cut perhaps to 25% of its current size.

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  7. Wrong Simon all trade agreements state that tax seen or unseen is illegal if it creates biased to one side! & it most certainly is biased against SME, So it is illegal but it is never going to get near a court room a non law ,like libertarians do no harm just a passage of non intent to offer up has seemingly being reasonable,when actually being unreasonable!Don’t blame the companies for lobbying & buying politicians to get us exactly were we are!

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  8. A most important thread, thank you, JW.
    UK is/is becoming as corporate controlled as the US.
    We are not as far down the path to Fascist dictatorship, yet.

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  9. Thought I read Amazon haven’t turned a profit yet and exist because the share price keeps increasing but as they say there’s lies ,damned lies and then statistics.

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  10. Simon Stephenson, it isn’t possible to say whether multi-nationals are involved in tax avoidance or tax evasion without detailed scrutiny of what they are actually doing rather than what they say they are doing or telling their auditors what they are doing. The problem is that HMRC abdicated their ability to check on these issues some years ago and it has all slid downhill since. When their is no regulatory discipline, things go to shit as we have seen with the banksters.

    MNCs are not they only tax compliance area this has happened in. One man service companies are another area where tax abuse has been allowed to become rife by HMRC not putting the stick about sufficiently. Friends of politicians rejoice. As John is aware its the neo-con agenda of both new labour and the tories that have allowed it to come to this. We’ve all been conned by the 1% and their bought and paid for politicians in Westminster. Jeremy Corbyn says he’ll tackle it, I say let the voters see the rabbit.

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  11. Just on German News – Germany is accepting 450,000 refugees next year. In my town there are special container houses for them and they are treated like kings here. The other day at my son’s Summerfest they were collecting for them.

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  12. Corruption is ‘one of the greatest enemies in our time’, Cameron warns as he cracks down on ‘dirty money’ buying UK homes
    Laundering has been blamed for pushing up house prices across Britain
    PM used Singapore speech to call for a global effort to tackle corruption
    A full list of all foreign-owned properties will be published in the autumn

    Butter wouldn’t melt in Cameron’s mouth…FFS…The irony…

    http://www.dailymail.co.uk/news/article-3176694/PM-s-crackdown-foreign-criminals-buying-UK-homes-dirty-money-Cameron-announces-clampdown-overseas-buyers-anonymous-companies.html

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  13. Still think that if you want cops a plenty and ready to deal with issues – just phone and say you’re going to shoot the burglar youve just found in your bedroom….. The whole force will be on your doorstep locked and loaded before you can put the phone down…..

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  14. O/T. I have been tipped off by friends in Scotland that our old friend, Garry, a PM that ,having abolished the economic cycle,then lead the Labour party to destruction in its own backyard, is now a patient in a mental health hospital in Edinburgh. I would really appreciate any corroborative evidence, either way, as to whether this is true.

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