Wednesday, February 20, 2008

Granite: a nice piece of Rock (but for whom?)

Tax Justice, and TJN, are hitting the news in Britain again, even before the latest furore over the domicile rule has died down. Take the latest heated exchange in Britain's House of Commons, prompted by work from TJN's Richard Murphy. Here is an excerpt from Hansard (the official record of events in the British parliament.) They are talking about legislation concerning the nationalisation of the bank Northern Rock following a bank run last year and ensuing crisis.

From my reading of the Treasury Committee’s brief reference to Granite and the advice received from accountants in the tax justice campaign, my understanding of the scheme-even its name suggests that it was a great wheeze-is that several of the directors at Northern Rock established an offshore vehicle to avoid tax.

In effect, it seems that they might have failed to include Granite, one of Northern Rock's off-balance-sheet vehicles, in the nationalisation. The government gets the poor quality part of Northern Rock's loans, while someone else unknown gets the filet mignon. As the Conservative MP Philip Dunne explained:

Guess who will pay the bill, if Granite is not included in the nationalisation? The taxpayer.

As Richard says, action is needed. The BBC explains it here in an article entitled " Taxpayers 'to get Rock rubbish'" Read more about this from Richard himself here, and the full excerpt from Hansard here.

(Update: some of the fears expressed by opposition MPs and recorded in this blog appear not to have been warranted. The other fears are entirely warranted.)

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