Sunday, January 16, 2011

 

Shocking Story of UK Tax Havens

What you see on the left is a picture of a beach on The Cayman Islands, probably the most active tax haven in the world. It features prominently in a well reviewed book by Nicholas Shaxon, Treasure Islands: Tax Havens and the Men Who Stole the World (Bodley Head). Extracts from the book were published in The Guardian recently. It reveals that, contrary to impressions given by international denunciations in 2008 and 2009, the offshore system has by no means been dismantled. It is in fact stronger than ever. More than half of all world trade passes through the offshore system; over half of all banking assets not to mention a third of foreign direct investment by multinationals. Shaxon reckons this system denies taxpayers the world over some £1000 billion- a sum too large even to contemplate its worth in terms of poverty alleviated or hospital/schools built.

He describes how the City of London is at the heart of this colossal corrupt system which has its origins in the activities of US gangsters seeking to launder crime proceeds to make them legitimate. To do this the British colony of Bermuda was first used but when that became too hot they moved to the Cayman Islands in the Caribbean. Despite its tiny population(30,000) these mosquito ridden islets are nominally home to 800,000 registered companies all of them paying virtually no tax. Cayman is now the world's 5th largest financial centre hosting three quarters of the world's hedge funds and $1.9 trillion on deposit, four times as much as New York banks.Wealthy people own about $11.5 trillion in offshore tax havens- one quarter of all global wealth. In 2006 700 of Britain's biggest businesses paid no tax at all in the UK.

Shaxon also relates how the British Establishment have regarded the tax havens UK has long sheltered in the inner ring of Jersey, Gernsey, Isle of Man and its residual overseas territories in the Caribbean:

In the archives, two schools of opinion emerge within the British civil service. On one side sits the Treasury, and especially its tax collectors in the Inland Revenue, who virulently opposed tax havenry and found the Cayman Islands especially obnoxious. The US authorities were clearly highly vexed too, and the British Foreign Office broadly opposed havenry, though its position was more nuanced.

On the other side sits the Bank of England, the most vociferous cheerleader for the new arrangements, and its far less influential supporter, the British overseas development ministry, which seems unperturbed by the possibility that local tax haven activities might foster massive capital flight from developing countries elsewhere.


Leona Helmsley, the billionaire property owner infamously once said: 'We don't p[ay taxes. Only the little people pay taxes...' Some people argue tax rates are so high that people have been forced into tax havens. Hmmm. How come people with so much money are 'forced' to store huge amounts of their cash in this way while still benefiting from the things taxes buy for the places where they live? And what about those fast cats who pay no tax at all? What's that got to do with the 'politics of envy' the swipe used by so many apologists for a system which enriches the few to such unjustifiable levels?

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