UK tax haven status worsens, fast

The UK's Association of Revenue & Customs, a union representing revenue officials, has issued a statement outlining the UK's further acceleration of its race-to-the-bottom offshore status.

The Association of Revenue and Customs (ARC) has described today’s disclosure of HM Revenue and Customs’ detailed plans for the next few years, which show a crackdown on evasion by small and medium-sized businesses but fewer resources to tackle avoidance by multi-nationals and the wealthy, as letting big businesses “off the hook”.

Tax Research outlines how bad things are already - before the further cuts. As he says:

This is a choice by this, and previous, governments. It’s an appalling choice; the wrong choice; a choice that means the rule of law is not being upheld, public services are being cut, our society is being undermined and hone3st business is acting at a disadvantage to those who cheat.

The last Labour government under Tony Blair and Gordon Brown had effectively capitulated to the lobby of the City of London and big multinationals in this respect. The current coalition government is taking Britain's offshore status to a whole new level, with initiatives such as this - an article that was, it turns out, too optimistic about how things were going to turn out. That particular initiative, which we've blogged several times before, is nothing short of a wholesale capitulation to big business interests, as Richard Brooks noted in a submission to the UK parliament in January.

The whole process has been overseen by a "tax and competitiveness group" comprising the finance or other directors of Vodafone Group plc, Diageo plc, RSA Insurance Group plc, GlaxoSmithKline plc, Rolls-Royce plc, General Electric Company, Ford Motor Company, Amey plc, Royal Dutch Shell plc plus the director of the business-funded Oxford University Centre for Business Taxation and the Director-General of the CBI. Again, the companies mentioned stand to gain significantly from the changes proposed.

That crude initiative, will cost the UK taxpayer greatly: so far, the initiative has transparently failed to achieve what it set out to do - while giving a free pass to multinationals which are already taking advantage of the UK's lax regime. As the Progressive Tax Blog noted:

"every other UK multinational that had no intention of leaving the UK is ecstatic."

That policy, an explicit attempt to turn Britain into even more of a tax haven than it already was, at least had the decency to be a little complicated - so the British public could be more or less bamboozled into not raising much of a stink about it. The latest attempt to capitulate to business demands, highlighted by ARC, is especially depressing because of the naked obviousness and simplicity of what is going on.

Big business will simply be let off the hook when it comes to tax. The message is that there won't be the resources, or even the backbone, to stand up to them when it comes to their aggressive, anti-democratic tax policies.

It's a shamefacedly vulgar effort to get multinationals to come to the UK in the hope of picking up a few crumbs from the global business table, while sweeping under the carpet the fact that this will seriously stiff taxpayers elsewhere and increase inequality the world over. Tax Haven UK goes from strength to strength.

A few - but still far too few - people are beginning to stand up against all this.

If you haven't already, please join the fight.
Postscript: We just blogged another scandal that stems from the same offshore mind-set: that of the dax-dodging Private Finance Initiative. We note now that Dexter Whitfield, one of the key interviewees in the BBC programme, has written his own article, providing additional details and noting that:

"The BBC programme revealed the appalling attitude of the HM Treasury and the National Audit Office in failing to identify the scale of equity sales and profiteering . . . PFI equity sales and the growth of a secondary market results in further erosion of democratic control. As infrastructure funds increase their offshore portfolios of PFI assets, they will use their power to influence decisions affecting the future management and provision of key public facilities."

(The Whitfield article also notes a report by his organisation, the European Services Strategy Unit, on the "growing trend in the use of tax havens" in this business and highlights 91 assets of this type held in Jersey or Guernsey.)