Afternoon:
10°c
Am I the only person in Britain who pays tax? That's certainly what it's felt like these past few weeks. I've lost track of how many people I've come across who are non-doms - yet seem to have lived all their lives here and have the most English of accents.
And if it's not the non-doms, it's those who claim not to live here, flying in and out for fewer than 90 days a year but still managing to run vast enterprises in the UK. Then it's the ones who do reside in the UK but put the business in their partner's name and the partner is holed up overseas.
My senior tax partner friend at one of the leading City law firms describes these as the most common "structural" ways of avoiding tax. Structural! Judging from the simplicity of my pay packet, where there's a top figure followed by a much-reduced figure, my own structure is too damned simple.
If nothing can be done about them - and I'm the first to concede that cracking down on non-doms may do London's position as a global financial magnet immense harm - then surely it is time to crack down on the tax havens.
We've a perfect excuse as we continue to fight the war against terror. We're also combating the drug barons and organised-crime. We want to do something about poverty in Africa. Those international financial pariahs, the hedge funds, are also fond of hiding behind nameplates in locations in the sun.
We can no longer turn a blind eye to places that specialise in stashing cash and fostering money-laundering. The offshore centres will say how much more co-operative and transparent they are these days - to which I say nowhere near enough.
Their grip has been brought home most tellingly by Northern Rock - the Newcastle bank's huge Jersey-based fund is not being nationalised, and has first choice over the best of the mortgage book.
I'd like to think we're pursuing the same policy as the Germans and that we're prepared to stop at nothing, including buying bank records, in the pursuit of tax dodgers. The uproar the German BND intelligence agency has provoked in Liechtenstein, where it's got hold of details of more than 700 clients of the principality's LGT bank in return for £3.2 million, and in neighbouring Switzerland is a joy to behold.
The Swiss have complained the BND's activities are reminiscent of the Gestapo. Would this be the same Gestapo that hoarded its own looted treasures in Swiss bank vaults during the war?
But paying informants to provide bank statements doesn't get to the heart of the problem. Angela Merkel, the German Chancellor, is threatening Liechtenstein with isolation.
We should follow suit - but we shouldn't stop there. Governments should get together to co-operate and agree a policy of slow suffocation across all jurisdictions that promote virtually non-existent taxation and total secrecy. World leaders can do it on other issues, most recently the global credit crunch, so why not on something that affects them all, where it hurts, in their pockets?
If the sort of sanctions that were imposed by the US on Cuba were applied to Monaco, the Channel Islands, the Isle of Man and the rest if they refuse to open up their accounts and harmonise their tax systems, they would quickly succumb.
For it to work, it needs the drive of an ambitious politician - one who wants to make a name for himself on the world stage. Like the future leader from Scotland who once told the Labour Party conference: "A Labour Chancellor will not permit tax reliefs to millionaires in offshore tax havens." Someone, in fact, like Gordon Brown.
Reader views (1)
Chris Blackhurst is being naive. The real world consists of countries, governments, companies and individuals that fight for large contracts and for their political objectives. Thousands of jobs and even in some cases lives depend on these deals. Often the only way to get a contract or agreement signed is to pay commissions which in come countries are seen as consultancy fees whilst in others as corruption. Offshore havens with complete confidentiality are crucial to help with these matters. This is the real world.
- Nick, London UK, 25/02/2008 19:34
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