Saturday, January 31, 2009

Next week: lots in UK media on tax havens

We've just noticed this up on the website of the BBC flagship Panorama programme - a preview of Tax Me If You Can: a look at tax havens with veteran reporter John Sweeney. It's likely to feature TJN's John Christensen quite strongly. It uses an $18.5bn figure from TJN's Richard Murphy. And much more.

And, as we noted in another blog today, the Guardian is just about to start firing up with what we believe will be some very exciting - stunning, we're told - tax haven stories. Don't miss any of them!


Links - Jan 31

** Also see our searchable archive of past story summaries, and Offshore Watch for more stories. **

We need more than sticking plasters, warns leading Labour backbencher
Jan 29 (Independent) - A prominent Labour backbencher has warned Gordon Brown that he needs to find a "new language" to explain to the public the actions that the Government is taking in the recession. He urged Mr Brown to launch "two crusades". One would be on "tax justice", including minimum tax rates throughout the incomes scale so that the rich paid their fair share and joining President Obama's crackdown on offshore tax havens.

Dear Western banking establishment,
Re. your unauthorised overdraft.
I notice that your unauthorised credit facility from international lenders of last resort now totals approximately $10 trillion. As a taxpayer and therefore your largest shareholder I would be grateful if you could repay this facility at your earliest convenience.
I would also be grateful if the strategists and economists who work for you could abstain from publishing their unsolicited opinions about resolving the banking crisis within the financial media.

Web translation here
Jan 28 (Der Spiegel) – Germany’s Der Spiegel Magazine takes a look at British Prime Minister Gordon Brown’s credentials – on the one hand claiming to favour transparency in international finance, while on the other, quietly backing the tax haven world. Quoting TJN’s John Christensen widely.

Brazil Freezes $2 Billion Amid Money-Laundering Probe (Update3)
Jan. 22 (Bloomberg) -- Brazil froze more than $2 billion in accounts outside the country as part of a money-laundering case involving Brazilian investors including banker Daniel Dantas.

New initiatives to tackle International tax avoidance
Jan 26 (HMRevenue and Customs, UK) - The Right Honourable Stephen Timms MP, Financial Secretary to the Treasury said: "The vast majority of taxpayers pay their fair share and do not seek to avoid their financial responsibilities. The avoidance industry seeks to profit from enriching those who are prepared to seek an unfair advantage over those who play by the rules. This in turn denies member countries vital financial resources.

Record capital flight from Argentina last year: 23 billion USD
Money leaving Argentina trebled in 2008 compared to the previous year and was 23% higher to the great capital flight of the second half of 2001 and first half of 2002 which totalled 18.7 billion US dollars and triggered the collapse of the banking system and melting of the economy, according to a report in La Nacion.

Put squalid tax havens out of business - Red Ken
Jan 26 (Guernsey Press) - Mayor of London Ken Livingstone is the latest high-profile commentator to target closing down Guernsey as a ‘tax haven’. Livingstone joked about invading the island to achieve this aim and pointed out that de Gaulle tried to prevent tax avoidance in Monaco by sending tanks to the principality’s border. In an open letter to Gordon Brown he talks more seriously about international changes creating the chance to ‘squeeze squalid little tax havens out of existence’.

Please don’t do it Zambia: you must tax copper
Jan 27 (Tax Research) - Some stories really hurt. This one in the FT does: “Zambia, Africa’s biggest copper producer, appears poised to drop plans to secure more of its mineral wealth.” This is a disaster if it’s true.

Banks failed to register subsidiaries in 'oversight'
Jan 25 (Observer) - Two of Britain's biggest banks have failed to register the location of their subsidiaries in what appears to be a contravention of British company law.

A runaway train
Jan 28 (Guardian, by Alex Cobham) - The question: What economic system would really benefit humanity?
The same secrecy and lack of regulatory coordination that caused the crisis also imposes other costs on developing countries. This is especially clear in relation to tax. Multinational companies' and rich individuals' ability to exploit tax havens and hide their profits is depriving poor countries of staggering amounts of revenue.

Transparency, Accountability Key to Restructuring of Global Financial System
Jan 28 (GFIP) - As policy makers, business leaders, and institutional stakeholders convene in Davos, Switzerland for the World Economic Forum, Global Financial Integrity (GFI) urges participants to call for greatly improved financial transparency and accountability. The importance of one of the Forum’s themes, “Addressing the Challenges of Sustainability and Development,” is underscored by a new GFI report titled “Illicit Capital Flight Out of Developing Countries: 2002-2006.” The key finding of the report is that developing countries lose as much as $1 trillion dollars a year in illicit capital flight as a result of illegal commerce, corruption, and tax evasion.


Rattle and bang

Polly Toynbee has written a fine new article in The Guardian about just the things TJN cares most about. A first thing to note is this: watch this space, for, as Polly notes,

"On Monday the Guardian reports on its investigation which reveals corporate tax avoidance on a gargantuan scale. . . . Delving into the truth of company taxes has taken the Guardian team months of digging, talking to whistle-blowers, and following the knotted strings that lead through a labyrinth of subsidiaries in secretive tax havens. As the story of each famous company unfolds, keep your eye fixed on every twist and turn. You will go on a journey through the minds of people who have wasted their talents on making others pay for everything that makes Britain the safe, civilised, beautiful, enjoyable place where these company directors wish to live and bring up their families."

This is just what we've been fighting to bring about: global attention to the shocking scale of what's been going on. In the media field, the Guardian is leading the charge (an honourable mention goes to the satirical British magazine Private Eye, which has been purusing this kind of stuff for years - please let us know if there are others (not blogs) you think we should mention. Alan Rusbridger, the Guardian's editor, recently wrote in the New York Review of Books about the newspaper's libel fight against the mighty retailer Tesco, saying that

"the advanced tax planning undertaken today by most global companies is as intelligible to the average person as particle physics," (find this and plenty more like it on our quotations page)

and noting that merely checking the truth of a story in the Private Eye story which backed the Guardian's legal case against Tesco cost an astonishing $17,000. So hats off to The Guardian for pursuing this with a vengeance - precious few others seem to be doing so. For aficionados, you can follow their special tax avoidance page here.

Please read the whole of Toynbee's story, which isn't that long. TJN talks to her from time to time (though not, as far as today's blogger is aware, on this particular story, though we are mentioned in another Guardian story today.) We'll leave you with her parting paragraph, which is something we've been going on about for years:

Corporate social responsibility" becomes an oxymoron when top companies who avoid so much tax parade policy documents adorned with pictures of wind turbines, smiling black faces and laughing children labelled "sustainability", "diversity" and "community". Many do good charitable work; but what is the use of boasting that "We are a good corporate citizen", or "Our core values of honesty, integrity and respect for people are at the heart of how we manage our business", while going to grotesque lengths to push their tax responsibility on to the rest of the "community"? The way to prove they are the "good corporate citizen" they claim to be is by paying the modest 28% that is the starting rate for all companies. Maybe culture change won't happen until we get out there with saucepans to rattle and bang some shame into those inside corporate headquarters.

Well said, and may the rest of the world's media follow suit.


Friday, January 30, 2009

US' Top 400 Taxpayers, and more on Geithner

From TaxProf:

"The IRS yesterday released data on the Top 400 tax returns for 1992-2006, which show a marked increase in the average amount of AGI and investment income (taxable interest, dividends, and net capital gains) reported by the Top 400 taxpayers over this 15-year period, along with a startling decrease in their average tax rate:"

See small graphs here and here, which show a decline in the tax rate from 26.4% to 17.2%.

How much did this select group earn? From Forbes:

"The 400 highest-earning taxpayers in the U.S. reported a record $105 billion in total adjusted gross income in 2006."

And here's something else from TaxProf today, an interesting twist :

"Congressman John Carter (R-TX) yesterday introduced H.R. 735, The Rangel Rule Act of 2009, which would add new Code § 7529 to prohibit the IRS from charging penalties and interest on back taxes. From the press release:

Under the proposed law, any taxpayer who wrote “Rangel Rule” on their return when paying back taxes would be immune from penalties and interest.

“We must show the American people that Congress is following the same law, and the same legal process as we expect them to follow,” says Carter. “That has not been done in the ongoing case against Chairman Rangel, nor in the instance of our new Treasury Secretary Timothy Geithner. If we don’t hold our highest elected officials to the same standards as regular working folks, we owe it to our constituents to change those standards so everyone is abiding by the same law. Americans believe in blind justice, which shows no favoritism to the wealthy or powerful.”"

Which makes Geithner's appointment, which we blogged recently, even more problematic.


Zambia caves in on mineral taxes

Richard Murphy recently had a blog entitled "Please Don't Do It Zambia - You Must Tax Copper."

It started like this:

"Some stories really hurt. This one in the FT does:
Zambia, Africa’s biggest copper producer, appears poised to drop plans to secure more of its mineral wealth. The move could mark the start of a retreat from resource nationalism among poor countries with plentiful commodities."

Now we've just noticed this, on Reuters:

"Zambia said on Friday it would scrap the controversial 25 percent windfall tax this year to cushion its key copper mining industry from the impact of the global financial crisis.

Finance Minister Situmbeko Musokotwane said in his budget speech in parliament the government would abolish the windfall tax to ensure the copper mines were kept afloat at a time when commodity prices have fallen due to dwindling demand.

"I propose the following refinements, to remove the windfall tax and retain the (15 percent) variable tax, which will still capture any windfall gains that may arise in the sector," Musokotwane said.

Dependence on mineral resources can be very harmful - there is ample literature on the subject of the "Resource Curse." But that is by no means an argument for selling off the family silver (or copper) for the equivalent of a few beads and reams of cloth. The key is to manage the resource well.

Murphy said:

"I quite literally want to cry at the continuing exploitation of the people of Zambia for the benefit of those in developing countries, and the wealthiest in the world who own these companies."


German anti-tax haven law - more details

We recently blogged some preliminary news stories about possible new German anti-tax haven legislation. We can now offer a seven-page "description and critical notes" analysis of this draft legislation produced by TJN.

It notes that the draft legislation could change dramatically the way secrecy jurisdictions are used in Germany. However, it also notes that it is weaker than comparable foreign legislation and leaves many questions to be determined.

"It would work in three ways.
  1. Some features of the German (double) tax regime that are advantageous to international investors are going to be removed under certain conditions.
  2. There are enhanced obligations to retain information and increased powers of the tax authorities to ask for information
  3. Customs authorities will have increased powers to search for and enquire about bulk cash found at the borders.
Click here for the full details.


UK banks must come clean on tax haven activities, says TUC

Britain's Trades Union Congress (TUC) has called on UK banks to come clean on their tax haven activities. A new press release of theirs says:

"The TUC is today (Thursday) calling on the Government to make the banks in which it has shares or who are receiving assistance from the Bank of England fully reveal their tax haven activities.

This follows a TUC analysis of company reports and returns which shows that the big banks have numerous subsidiaries in tax havens and that one, in an apparent breach of company law, has not revealed its subsidiaries.

The TUC research uses the same definition of tax havens as a study carried out for the US Senate by the US Government Accountability Office (GAO)" - see here.

The TUC report (click here - though see the press release for the text accompanying it ) was produced by TJN's Richard Murphy. The banks have responded, and Murphy comments on their responses, here.


Wednesday, January 28, 2009

Paulson's secret tax break: will it go?

Citizens for Tax Justice had this to say:

A provision in the package would rescind IRS Notice 2008-83, also called the "Wells Fargo ruling" after its largest beneficiary. In October, the IRS issued this two-page notice declaring, with no authorization from Congress, that banks could ignore a section of the tax code enacted under President Reagan to prevent abusive tax shelters. In December, over a hundred organizations signed a letter to the House and Senate asking them to rescind the Wells Fargo ruling.

An online six-minute video from the American News Project (click here if you need the YouTube version) explains how Treasury officials under former President George W. Bush issued the Wells Fargo ruling with no legal authority and gave banks a hand-out beyond their lobbyists' wildest dreams. The video features interviews with CTJ director Robert McIntyre and Senator Bernie Sanders, the sponsor of the Senate bill to rescind the Wells Fargo ruling, and gives props to the organizations that signed the letter urging Congress to enact his legislation.

Towards the end of the video Senator Sanders questions whether or not the ruling Democratic party will be courageous enough to stand up to the lobbyists for powerful financial interests. Well, that question will be answered soon, because the House stimulus bill to be voted on today includes the proposal that was introduced in the House last year to rescind the Wells Fargo ruling -- and this is one more reason to support the stimulus bill. The Senate version has also recently been amended in the Finance Committee to include a provision rescinding the Wells Fargo ruling. Senator Sanders has been willing to stand up against unjust giveaways like this even when doing so is not popular on either side of the aisle. Tax fairness advocates need to work to make sure his courage and hard work pays off by supporting this reform.


News from the Tax Justice Council Meeting in Belem, Brazil

28th January 2009

The Tax Justice Network has just held its biennial Council Meeting here in Belem, Brazil, which is currently hosting the World Social Forum.

The Tax Justice Council Meeting is the highest level decision making body of the global network. This is the meeting which elects our global Board of Directors, discusses long and medium term strategy, ratifies new members, and generally shapes the overall direction taken by our regional steering committees and national chapters.

In an upbeat assessment of our progress since the last Council Meeting (Nairobi, Kenya, 2007) Bruno Gurtner, who chairs our global Board, described TJN as a success story. We have played a role in putting tax matters at the heart of the development agenda; we have worked effectively with many development NGOs and persuaded them to engage on tax matters; we have contributed to huge upsurge of media interest in tax evasion, tax competition, wealth distribution and corrupt financial practices; above all we have put tax havens under the spotlight and shown them for what they truly are - engines of financial chaos and centres of corruption.

In 2008 TJN celebrated its fifth anniversary. We are no longer in our pioneer phase: we are established on the world stage, and need to adapt to a new phase of activity in which we broaden our communications to a wider audience and strengthen our capacity to work with a wider variety of partners in new regions of the world, including Latin America and Asia (happily we have just ratified the membership of our first member organisation located in South East Asia - Actions for Economic Reforms, based in the Philippines). We will be posting the full text of Bruno's report to this blog within the next few days.

The first major business item on or agenda this morning was to elect a new global Board and officers. The new Board is made up as follows:

Francois Gobbe (Kairos Europe, Brussels) - re-elected as Treasurer
Ian Goldman (TJN-Canada)
Bruno Gurtner (TJN) - re-elected as Chair of the Board
James Henry (TJN-USA)
David McNair (Christian Aid, UK)
Rachel Moussié (Action Aid International)
Michel Roy (Secours Catholique, France)
Georg Stoll (TJN-De) - elected as Secretary to the International Association
Attiya Waris (Tax Justice 4 Africa)
Francis Weyzig (SOMO, Netherlands)

In addition, it was agreed that representatives from LatinDADD and Actions for Economic Reform, Philippines, will join the Board with observer status.

In a broad tour d'horizon of the current activities of the International Secretariat, our director John Christensen highlighted the research programme into secrecy jurisdictions, the first results of which will be posted to a purpose-built website during the first quarter of 2009. He also told the Council that the research team is on target to publish the first results of the Financial Transparency Index in the last quarter of 2009. The latter is likely to stir the pot in quite a number of European countries and states in the USA. John's report to the Council will be posted to this blog in the coming days.

TJN will be participating in around half a dozen seminars and workshops at the WSF in the coming days and we will keep you posted on how these go. Tax havens and the financial crisis will be a central theme throughout the WSF.


Tuesday, January 27, 2009

UN crime chief says drug money flowed into banks

This story from Reuters will not surprise anyone who follows these things. But it is worth highlighting.

"The United Nations' crime and drug watchdog has indications that money made in illicit drug trade has been used to keep banks afloat in the global financial crisis, its head was quoted as saying on Sunday.

Vienna-based UNODC Executive Director Antonio Maria Costa said in an interview released by Austrian weekly Profil that drug money often became the only available capital when the crisis spiralled out of control last year.

"In many instances, drug money is currently the only liquid investment capital," Costa was quoted as saying by Profil. "In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor."

The United Nations Office on Drugs and Crime had found evidence that "interbank loans were funded by money that originated from drug trade and other illegal activities," Costa was quoted as saying. There were "signs that some banks were rescued in that way."

Profil said Costa declined to identify countries or banks which may have received drug money and gave no indication how much cash might be involved."


International News - Jan 27

** Also see our searchable archive of past story summaries; and Offshore Watch for more stories. **

U.S. Tax Case Against UBS Grows Wider; Talks to Settle
Jan 26 (WS Journal) - U.S. tax investigators believe the number of American clients that UBS helped to avoid taxes could be much higher than the previously disclosed estimate of about 17,000. Investigators are also looking into whether other parts of the bank besides the wealth-management unit were involved in helping clients avoid U.S. taxes.

Banks failed to register subsidiaries in 'oversight'
Jan 25 (Observer) - Two of Britain's biggest banks have failed to register the location of their subsidiaries in what appears to be a contravention of British company law. TUC boss Brendan Barber believes the "oversight" is part of a worrying trend in which banks that are now receiving hundreds of billions of pounds in treasury support have been using secretive tax havens

UN crime chief says drug money flowed into banks
Jan 25 (Reuters) - The United Nations' crime and drug watchdog has indications that money made in illicit drug trade has been used to keep banks afloat in the global financial crisis, its head was quoted as saying on Sunday.

Brussels looks for lost VAT in the Channel
Jan 25 (Tax Research UK) - Some of the leading online CD and DVD retailers in the UK continue to avoid taxes, depriving Treasury coffers of hundreds of millions of pounds and pushing many independent music stores out of business. Richard Murphy looks into why the Treasury turns a blind eye to this tax abuse.

Obama to influence Hongkong as tax havens
Jan 19 (International Business Times) - Hong Kong and Singapore may soon come under increased scrutiny from the US, if incoming President Barack Obama follows through with his pledge to crack down on abusive "tax havens" which "peddle secrecy" and "cloak tax evasion and other misconduct," according to Withers law firm.

Top Canada court boosts tax avoidance rule
Jan 23 (Lawyers Weekly) - The Supreme Court has ramped up the importance of the Income Tax Act’s general anti-avoidance rule (GAAR) with what one expert calls “the most significant tax decision in 70 years.”

U.S. and U.K. Could Fall Out over Tax Havens
Jan 25 (Seeking Alpha) - The lack of desire on the part of the UK to participate in a new international crackdown on financial secrecy and tax havens could bring about some tension in the so called “special relationship” between the UK and the US.

Editorial: To be Forewarned is to be Forearmed
Jan 21 (Cayman Net News) – The public and private sector leaders in the Cayman Islands should immediately take urgent steps to identify the possible exposure of our financial services industry to a mass pullout by foreign banks now controlled by their respective governments and the economic and social implications such an event will have on the Cayman Islands.

German ex-high-flyer in tax trial
Jan 22 (BBC) - The former head of Germany's Deutsche Post, Klaus Zumwinkel, has gone on trial for tax evasion. He pleaded guilty to charges of avoiding paying nearly 1m euros in taxes (more than £900,000) in 2003-07.

Pirates in Pinstripes Sink Britain
Jan 22 (Op Ed News) - Even in this crisis, the British government still offers refuge to pinstriped pirates - Britain's tax havens fuel crime and corruption on a huge scale but, for Prime Minister Gordon Brown, keeping business happy is still the priority.

Tim Geithner's tax evasion
Jan 22 (Telegraph Blogs) - THE US senate finance committee has voted for Tim Geithner, tax evader, to become Treasury secretary. He is likely to be confirmed by a vote on the senate floor soon, thanks to the virtually free pass he has been given by the media, the toothless opposition of the Republicans or the magnitude of Obama's first betrayal of his ideals.

EU To Propose Climate Tax
Jan 26 (Environmental Leader) - The European Union is expected to propose a climate tax on greenhouse gases from 2013-2020. The tax could help raise $200 billion and help poor countries prepare for global warming, Reuters reports.

Raju under lens for capital gains tax fraud
Jan 27 (Economic Times) – The tax authorities are taking a hard look at how the disgraced promoter of Satyam Computer Services, B Ramalinga Raju, used money raised through pledging of shares. The move will enable the income-tax department to trace some of the undisclosed income of Mr Raju, his family members and their investment firms—an exercise that is distinctly different from the current probe on diversion of Satyam’s funds.


Hedge fund reform to bring investors to their senses

Professor Sol Picciotto, a senior adviser to TJN, has co-written a letter that appears in the Financial Times. We are delighted to reproduce it in full.

Hedge fund reform to bring investors to their senses
January 26
From Prof Sol Picciotto and Prof David I. Campbell.

Sir, Current debates about rules for hedge funds (“Hedge funds move to limit rules burden”, January 19) are tackling the problem at the wrong end. There should indeed be no need to regulate hedge funds, provided that they invested only their own money, were subject to normal rules of disclosure, and their income was properly taxed. Then they would actually be private funds, rather than funds that exist only because of special treatment by public authorities.

We believe that hedge funds greatly contribute to undesirable levels of speculation and hence instability, rather than to what is supposed to be their true purpose, knowledgeable investment. Their deleterious effects could be greatly reduced or eliminated by two significant, but obvious, reforms.

First, any bank that is backed by the taxpayer (via the lender of last resort guarantee) should be prohibited from lending to hedge funds. This would greatly reduce those funds’ leverage, and therefore their excessive risk-taking.

Second, hedge funds’ returns should be properly and fully taxed as income, and the Inland Revenue should vigorously attack their use of tax havens for tax avoidance and evasion, to which a blind eye has been turned for too long.

Deprived of these substantial public subsidies, hedge fund investors would be risking only their own money. They should, of course, be at perfect liberty to do this.

However, once deprived of the public subsidy that has underpinned seemingly unending and high returns, we would expect that enough investors would come to their senses to change the ridiculous governance structures that allow fund managers to profit enormously from the upside and lose nothing on the downside. If not, so much the worse for those investors.

Sol Picciotto,
Emeritus Professor of Law,
Lancaster University, UK

David I. Campbell,
Professor of Law,
University of Durham, UK


Monday, January 26, 2009

Letter from Washington

Today's blogger has just returned home from a trip to the United States, where the high point of the trip involved standing on the Mall in a chilly Washington D.C. on January 20 watching the inauguration of President Barack Obama. Next to me an experienced and Iraq-hardened British wire agency journalist stood silently, tears welling up in his eyes. Later, seeking to catch the Amtrak train down to New York City, the crowds were far stiffer than they had been on the Mall: police with megaphones directed hordes of us back and forth, trying to get us squeezed through the tiny choke points allowing us into Union Station. Most of us missed our scheduled trains. The crowd was extraordinarily good-natured. Almost no pushing, no shoving, but a lot of chanting: "We can't hear you!" (to the police with megaphones, competing with the news helicopters overhead) and "Trains We Can Believe In!" and the like.

We are encouraged by the change, of course: as you may know, Obama was one of three co-signatories of the Stop Tax Haven Abuse Act. This blog looks at some very early indications to see how the wind is blowing so far.

In conclusion: we are modestly encouraged, but there are some grounds for concern. First of all, the presence of Bono, the tax-dodging Irish musician, as a star performer at the even chillier pre-inauguration on January 18th, jarred with us. Much of Obama's inauguration speech, while not focussing specifically on tax, might as well have been (some of the pundits are saying that it was designed to appear to be all things to all people.) Shared sacrifice, the common good, and the relationships of trust between rulers and their people which build citizenship - these were all common themes, and taxation lies at the heart of each.

"We come to proclaim an end to the petty grievances and false promises, the recriminations and worn out dogmas, that for far too long have strangled our politics . . . what the cynics fail to understand is that the ground has shifted beneath them - that the stale political arguments that have consumed us for so long no longer apply. The question we ask today is not whether our government is too big or too small, but whether it works.
. . .
Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched, but this crisis has reminded us that without a watchful eye, the market can spin out of control - and that a nation cannot prosper long when it favors only the prosperous.
. . .
What is required of us now is a new era of responsibility - a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task. This is the price and the promise of citizenship."

Whatever you thought of the speech, there are some more specific, subsequent matters that bear consideration. A key early indicator is that of his appointments. Here we see cause for concern, mixed with some positive signals -- especially with respect to Obama's pick of Tim Geithner as Treasury Secretary. Of particular concern here is his own personal tax affairs, as has been widely reported. The Washington Post put it like this:

"A 2006 IRS audit informed Geithner that he had failed to pay self-employment taxes in '03 and '04, when he directed the International Monetary Fund's policy development and review department. While being vetted for Treasury secretary late last year, he was told he made the same errors on his '01 and '02 returns. He calls them "careless mistakes" that he should have caught and has paid $42,702 in back taxes."

We won't dawdle on this issue - not because it isn't absolutely, screamingly important - it is, and we are horrified that this should have been allowed to stand, given that independent sources have said, looking at what's in the public domain, that Geithner probably participated in nothing short of outright tax evasion - but for the fact that this has been widely discussed and it's slightly old news already.

On a more positive note, we are somewhat reassured by Geithner's testimony at his confirmation hearing on January 21. Here are a few of the question and answer sections:

Question: The Finance Committee has had a number of hearings on the offshore tax evasion issue and I believe the next step is to pass legislation cracking down on offshore tax evaders, and I will be introducing a bill early in this session of Congress to address this problem. Mr. Geithner, I hope you will take a close look at this legislation and help us to pass it from your new perch at the Treasury Department. Will you commit to setting aside time to help us develop a solution to this problem?

Geithner: Yes, Senator Baucus, as soon as my tax team is fully in place, I look forward to setting aside time to review your forthcoming legislation and helping you, your staff, and other members of the Senate develop a solution to the problem of offshore tax evasion. I share the President’s commitment to aggressively address the problem of offshore tax evasion and complement you and other members of the Senate for the work you’ve already done on this important issue. If confirmed, I will treat offshore tax evasion as a high priority issue and examine a wide range of policy options to address these abuses, including increasing IRS enforcement efforts, requiring greater disclosure and taxpayer accountability, and changing the presumption for transactions in tax-secrecy jurisdictions.

Question: What can the IRS do to stem the tide of scams and schemes – offshore arrangements like UBS, and abuses like the Madoff Ponzi scheme - that result in folks hiding their income from Uncle Sam?

I share the President’s commitment to closing down tax loopholes. I look forward, if confirmed, to working with the committee to examine this issue. If confirmed, I will be a strong advocate for the Internal Revenue Service and its efforts to secure sufficient funding to carry out its mission successfully. Tax enforcement is a key priority for the IRS and I look forward to working with IRS Commissioner Doug Shulman to ensure that the compliance and enforcement mission of the IRS receives the necessary support and funding."

These are encouraging words, and there are various other answers Geithner gives on taxation generally, which are a little vague, unfortunately, but don't raise any specific red flags at this stage. You can read a little more, mostly on non-tax issues, here. Still, we wish it weren't a tax-dodger in this terriffically important job.


Wednesday, January 21, 2009

International News - Jan 21

ECB's Trichet at European Parliament

Jan 21 (Reuters) - The following are comments by European Central Bank President Jean-Claude Trichet during his testimony on Wednesday at an economic committee of the European Parliament. 'We are talking about tax havens that don't respect financial transparency, don't meet rules, don't allow us to tackle the proceeds of crime, terrorism.' 'We are in favour of strengthening the application of global rules.'

Can the UK government stop the UK banking system going down the snyrting without risking a sovereign debt crisis?
Jan 21 (FT Buiter blog) - The same version of the ‘Dutch disease’ - the crowding out of the non-financial internationally exposed sectors (exporting and import-competing) by the excessive growth of the financial sector and the construction industry - occurred in both countries, again to a greater extent in Iceland than in the UK, but to an highly undesirable extent even in the UK. Ireland may well be the next country where the ‘too large to rescue’ theory may be tested, although countries like the Netherlands, Belgium, Luxembourg, the UK and, outside the EU, Switzerland, are also potential candidates

Bankers accused in crisis could face trials in US
Jan 21 (Guardian) - Sanctions against bankers deemed responsible for the financial crisis could include more legal action abroad, lawyers say. The UK Serious Fraud Office, which is also responsible for prosecuting financial crime in the UK, was described recently by US prosecutor Jessica de Grazia as suffering from "startlingly low productivity and convictions rates compared to its New York counterparts".

Switzerland Remains Leading Wealth Management Centre, by Ulrika Lomas,, Brussels

January 21 (Tax-news) – A Swiss Bankers Association report, released this month, has reflected on Switzerland's success in gaining status as a leading global wealth management centre.

Obama to influence Hongkong as tax havens

Jan 19 (IBTimes ) - Hong Kong and Singapore may soon come under increased scrutiny from the US. The centrepiece of the Stop Tax Haven Abuse Act is a provision that would force taxpayers to prove that they do not have control over any offshore entities with which they contract, including trusts,corporations, limited liability companies and partnerships. The STHAA would also increase reporting and withholding requirements on financial institutions and fiduciaries dealing with tax havens.


New German anti-tax haven law

We are getting reports of new German anti-tax haven legislation. According to the Suddeutsche Zeitung (translation here ), German Finance Minister Peer Steinbrueck

"wants a massive tightening of laws directed at states that promote tax evasion and which deny co-operation with the German authorities."

Note: we are using an imperfect web translation programme - and it's possible that we've mis-translated something here - but the broad thrust is clear. The newspaper continued:

"According to a draft bill payments to companies in uncooperative states would no longer be recognized as operating expenses, if the government issues the respective decree."

Der Spiegel newspaper said (translation here)

"The plan provides, inter alia, to make money transfers to these countries drastically more expensive. . . . On the one hand, the widespread diversion of payments through tax havens (with which many companies put their profits beyond German taxation) would be blocked. At the same time the services of banks and other helpers of tax evasion - such as Guernsey and the Cayman Islands - would become very expensive, because payments could no longer be claimed as costs for tax deduction."

Once again, we would repeat the proviso that we may have mis-translated some nuances in these articles. But it is clear that some good things are happening here.

Update: the draft legislation is here (with a strange translation here.)


Tuesday, January 20, 2009

International news - Jan 20

Multinationals flee Bermuda
Jan 17 (Intertax) - Frightened by the inauguration of a new U.S. administration that has made the fight against tax havens a priority, a half-dozen large companies domiciled in Bermuda and the Cayman Islands have announced their change of address to Switzerland. In French, with translation here.

Do not squander America’s stimulus on tax cuts
Jan 15 (FT, by Stiglitz) - Some suggest that, having exhausted the more transparent bail-out strategy, banks are seeking less transparent help through the tax code. household tax cuts, except for possibly the poorest, should have no place in the stimulus. Good accounting looks at assets and liabilities. Spending on infrastructure, education and technology create assets; they increase future productivity.

Revenue property firm on the brink
Jan 18 (Times) - MAPELEY, the offshore company that owns the Inland Revenue’s property portfolio, has warned shareholders it could go bust unless they vote in favour of a rescue convertible bond issue backed by Fortress, the American investment group.

Tax evasion `VIP unit' will chase celebrities and City fat cats
Jan 19 (Telegraph) - Celebrities and business tycoons will be targeted by a new team set up to identify tax evasion by the super-rich.

Global Task Force Links Financial Integrity and Economic Development
Jan 17 (TJN) - Global Financial Integrity, with which the Tax Justice Network works closely, has issued a press release on their Task Force on Financial Integrity and Economic Development.

83% of big U.S companies, contractors use offshore tax havens
Jan 17 (TJN) – From the Washington Post - the US Government Accountability Office (GAO) has just issued a report showing that 83 of the 100 largest publicly traded corporations and 63 of the 100 largest federal contractors rely on offshore subsidiaries to do business and cut their tax bills. Also see here.

Jan 14 (TJN) – In case you missed it.

Swiss to hand over data to end UBS tax case-report
Jan 18 (Reuters) - The Swiss government plans to hand over some data on UBS clients and accept a large fine against the bank in exchange for U.S. authorities ending a damaging tax probe, the NZZ am Sonntag reported.

More than 50 nations tackling tax havens
Jan 19 (Tax Research UK) –A few years ago a few of set out on a journey to tackle the problems secrecy jurisdictions and the financial architecture that supports them cause. We travelled in hope, and in the face of considerable opposition . To have the explicit backing of several governments present at the meeting, both financially and explicitly, plus the clear support from the more than fifty nations aligned to the Leading Group of Nations, ably represented by France in DC, is an extraordinary boost.


Saturday, January 17, 2009

Global Task Force Links Financial Integrity and Economic Development

Global Financial Integrity, with which we work closely, has issued this press release:

WASHINGTON, Jan. 15 /PRNewswire-USNewswire/ -- A unique global coalition of civil society organizations and more than 50 governments was launched today to address the inequalities in the financial system that penalize billions of people. The Task Force on Financial Integrity and Economic Development advocates for greatly improved transparency and accountability in the global financial system. The opacity and complexity of the financial system, enabled by financial institutions, laundering techniques and more than 70 secrecy jurisdictions, is at the heart of the current financial crisis and significantly impedes the ability of poor countries to develop their economies.

"The Task Force will promote increased transparency and international cooperation to enhance the integrity and governance of markets," said Raymond Baker who is Director of Washington, DC-based Global Financial Integrity which heads the Task Force. According to John Christensen of the Tax Justice Network in London, "Illicit financial flows drain money out of poor countries, enable criminal activity, and undermine international development." Julien Meimon of the Leading Group on Solidarity Levies to Fund Development noted that "the explicit goal is to facilitate innovative financing mechanisms to ensure a fair share of the world's resources are made available to its poorest people especially in developing countries."

The Task Force advocates:

  • That systems be put in place to curtail the practice of mispricing trade;
  • That country-by-country reporting of sales profits and tax paid by multinational corporations be required in audited annual reports and tax returns;
  • That the beneficial ownership, control and accounts of companies, trusts and foundations be readily available on public record to facilitate due diligence;
  • That automatic exchange of information between tax and governmental authorities on income, gains and property received by non-resident individuals, corporations, and trusts, be made mandatory;
  • That predicate offenses for a money laundering charge be harmonized and codified.

Norway is the first funder of the Task Force and Harald Tollan from the Ministry of Foreign Affairs said that "the Task Force is a natural extension of Development Minister Erik Solheim's focus on the damaging effects of illicit financial flows, and the continuation of the constructive partnership formed by civil society, international organizations and governments under the Norwegian-led efforts to address illicit financial flows."

Dorothee Richter, from the German Federal Ministry for Economic Cooperation and Development, noted that "the new coalition is indispensable in the fight against illicit financial flows. Our initiative at the International Tax Compact strongly supports the work of the Task Force."

In the near term the Task Force will focus on the April meeting of G20 nations in London to promote its agenda with governments.

See the Task Force's Mission Statement and Priorities.


83% of big U.S companies, contractors use offshore tax havens

GAO: 83% of big U.S companies, contractors use offshore tax havens

Jan 16 (Washington Post) - The US Government Accountability Office (GAO) has just issued a report showing that 83 of the 100 largest publicly traded corporations and 63 of the 100 largest federal contractors rely on offshore subsidiaries to do business and cut their tax bills. Some have received tens of billions in bailout money: Citigroup, for example, has received $25 billion from the bailout fund, plus $300 billion in government guarantees — and has 427 tax haven subsidiaries; 91 in Luxembourg, 90 in the Cayman Islands and 35 in the British Virgin Islands. Report summary here; full report here.

First, an indication of some of the worst offenders, in terms of numbers (sheer number of offshore subsidiaries does not necessarily provide a good guide of how bad a company is, but it probably does give a certain indication of, shall we say, a mindset. Here are some of the big ones:

Citigroup (427 offshore subsidiaries)

Morgan Stanley (273)

News Corporation (152)

Bank of America (115 - see the latest lifeline story)

Lehman Brothers Holdings (57)

Wachovia Corp. (59)

Marathon Oil (78)

ExxonMobil (32)

Goldman Sachs (29)

Merrill Lynch (21)

We often like to criticise companies that we find doing this kind of thing. But for a change, here is a "white list" of companies that have NOT been identified by the GAO as having subsidiaries in these countries. Some of these companies (defence companies, Wal-Mart, for example) have been the target of campaigners' ire for various reasons, but they seem to have kept themselves off this list at least. They are:

AT&T Inc.
AmerisourceBergen Corporation
CVS Caremark

Enterprise GP Holdings

Fannie Mae

Freddie Mac

Home Depot


Johnson Controls

Lockheed Martin



Northrop Grumman




No firm conclusions can, of course, be drawn about any of these companies just from this list. And some companies that aren't listed as having tax haven subsidiaries find other ways to use the offshore system. For example, a second list of top federal contractors listed in this GAO report, KBR Inc. is listed as having no foreign offshore subsidiaries.Take a look at this Boston Globe story from last March, for example:

"Kellogg Brown & Root, the nation's top Iraq war contractor and until last year a subsidiary of Halliburton Corp., has avoided paying hundreds of millions of dollars in federal Medicare and Social Security taxes by hiring workers through shell companies based in this tropical tax haven.

More than 21,000 people working for KBR in Iraq - including about 10,500 Americans - are listed as employees of two companies that exist in a computer file on the fourth floor of a building on a palm-studded boulevard here in the Caribbean. Neither company has an office or phone number in the Cayman Islands."

This kind of ongoing research that the GAO has done is essential, and we applaud it. Bit by little bit, light is starting to permeate the dark spaces of the global economy.


Friday, January 16, 2009

Links - Jan 16

British Tax Haven’s Safety, Secrecy Face Brown, Obama Challenge
Jan 16 (Bloomberg) - The Isle of Man admits that it channels billions of pounds into London’s financial district. “We are vitally important feeders into the United Kingdom,” Bell said. Gordon Brown, said John Christensen, director of U.K.-based non-profit Tax Justice Network and economic adviser to Jersey from 1987 to 1998, “can’t reform the world financial system without reforming the fiscal black holes he is responsible for.” The Isle of Man also faces a challenge from Washington.


Wednesday, January 14, 2009


From the Editors

January 2009

The Next Steps Edition – click here

This is a special edition of Tax Justice Focus looking at the tumultuous events of the last year, and looking forward to next steps in a fast-changing world and a deepening global economic crisis. It is edited by Nicholas Shaxson and John Christensen.

In the editorial on page four, What a Year, we look at the remarkable changes that have occurred in 2008, as our agenda has spread rapidly into new constituencies. partly motivated by a mobilisation ahead of the Doha conference on Financing for Development, alongside a growing awakening on our issues in the context of the global economic crisis. It looks at some of our projects for the year ahead.

In our lead article Tax and Development Jeffrey Owens, head of tax at the OECD, looks at why tax, long neglected in the development debates, is so important. He explores the constraints developing countries face with respect to tax, and offers pointers to non-governmental and other actors. New efforts ar needed, he argues, to develop an internationally accepted methodology for measuring aspects of the problem.

In our second feature article The Plato Index: Measuring Tax Justice, on page six, Professor Edmund Valpy Fitzgerald and John Roche lament the lack of good data on tax for developing countries, and explain their revolutionary work (in partnership with TJN) in developing a new tax data base and a new index to measure and compare tax justice, across and between countries. We hope that this index will eventually be included in the new United Nations Development indicators.

John Christensen follows this up with his long feature article on page eight, Doha: A cup half full? which follows our special Doha edition last April. Examining the moderate progress recorded at the conference on financing for development at Doha, Qatar from November 29-December 2. He concludes that we came away with a feeling that tax matters have moved from the periphery to the core of the development debate, and we know we have played a part in this.

Other key articles:

* In Tax Systems for Poverty Reduction on page 10, we look at TJN’s new three-year programme funded by the UK Department for International Development (Dfid) providing education and training materials for NGOs and others working in developing countries.

* The article S4TP – a project for South-South co-operation on the same page describes a new project in partnership with UN agencies and New Rules for Global Finance to foster the sharing of best tax practices among developing countries

This is followed, on page 11, by two film presenations, on The End of Poverty and La Grande Évasion, both of which feature TJN and have had quite an impact.

Finally, this edition ends with two expert book reviews. The first is a review by INDIRA RAJARAMAN of the book Institutional Competition by Andreas Bergh and Rolf Hoijer; the second review, by ALESSANDRO SANTORO, looks at David Weisbach’s Economics of Tax Law.


Agenda for TJN Council meeting in Belem

A procedural note:



1. Apologies for absence
2. Agreement of agenda
3. Election of Chair for the Meeting
4. Election of Secretary for the Meeting
5. Report for 2007 / 2008 from the Board of Directors (Bruno Gurtner)
6. Report for 2007 / 2008 from the International Secretariat (John Christensen)
7. Election of Board Members
8. Election of Board Chair, Vice-Chair, Treasurer and Secretary
9. Admission of new Members and Supporters
10. Agreement of research, campaign, communications, and advocacy priorities for
2009 / 2010
11. Any other business


International News - Jan 14

** Also see our searchable archive of past story summaries; and Offshore Watch for more stories. **

Executive at UBS Is Deemed a Fugitive
Jan 13 (NYT) - Raoul Weil, 49, a Swiss citizen, oversaw UBS’s lucrative cross-border private banking operations from 2002 to 2007. Two months after being indicted by a federal judge in connection with a widening investigation of UBS’s offshore private banking services, his whereabouts are unknown.

UBS expects $1.8 bln U.S. fine in tax case-paper
Jan 11 (Reuters) - Swiss Sunday newspaper Sonntag reported that Switzerland's UBS expects a fine of some 2 billion Swiss francs ($1.80 billion) related to a U.S. tax investigation.

Calif. court rejects lawsuit against tax increases
Jan 10 (AP) — An anti-tax group will consider new legal action after a California appeals court tossed out a lawsuit that sought to block tax increases passed by Democrats in the state Legislature, the group said Thursday.

Pelosi Urges Obama to Raise Taxes on Wealthy This Year
Jan 8 (Washington Post) - House Speaker Nancy Pelosi (D-Calif.) is urging the incoming Obama administration to stick to its campaign pledge and immediately increase taxes on the wealthiest Americans, a position that President-elect Barack Obama has wavered on since winning election.

Manulife in hot water over tax shelter
Jan 6 (Financial Post) - Manulife Financial Corp. is attempting to take advantage of the credit crisis to cash in early on a complex financial transaction that lawmakers view as a "tax shelter scam" and were due to shut down, inciting fury on Capitol Hill.

Morgan Stanley, GE Want Tax Waiver on Loans From Offshore Units
Jan. 13 (Bloomberg) - They are promoting a plan to Congress that would waive U.S. tax penalties on businesses that borrow from their offshore units. The proposal would allow foreign subsidiaries to lend cash to their parent companies for up to two years without triggering a tax that would otherwise be due.

Sleeping watchdogs
Jan 14 (Guardian) - India's intellectual elite has abdicated responsibility for developing accounting and auditing technologies fit for an emerging economy. Instead, they have adopted standards developed by corporate dominated western organisations such as the International Accounting Standards Board and the International Auditing and Assurance Standards Board. These may not be appropriate for family-dominated companies.

Africa May Face 'Centuries' of Poverty
Jan 8 (IPS) - Extreme poverty will continue to blight sub-Saharan Africa for another 200 years unless action to overcome it is intensified, a new report has suggested.


Monday, January 12, 2009

Doha - update from SOMO

In October we highlighted a report from our Dutch Colleagues SOMO called "Taxation and Financing for Development" which contains much good stuff. They have just updated it, to add their commentary on the outcomes from Doha (which we blogged at length here.) The update, below, highlights some important points - for all to bear in mind.

"The Doha Declaration on Financing for Development, the outcome document of the conference, refers to capital flight and illicit financial flows in paragraph 20. However, the approach is heavily linked to money-laundering, stolen assets, corruption and capital flows that have criminal intent. There is no mention of illicit commercial flows, although these are far more extensive than the illicit lows related to corruption and proceeds from criminal activities, and therefore have a much bigger impact on developing countries.

The need to ‘effectively combat tax evasion’ is mentioned in paragraph. This is clearly a positive statement. However, even though the paragraph is relatively straight-forward, no connection is made between tax evasion and the notion of the above-mentioned illicit financial flows.

Another positive aspect in the same paragraph is the encouragement to make ‘tax systems more pro-poor’. Also important is that an explicit link is made between Foreign Direct Investment and taxation. The initial wording on this issue, in paragraph 25, reads: ‘It is important to promote good tax practices and avoid inappropriate ones.’ This paper contains the recommendation that the UN upgrade the UN Tax Committee to an intergovernmental body. This is also what civil society organisations and several governments were aiming for. To this effect, the outcome document says, ‘we acknowledge the need to further promote international cooperation in tax matters, and request the Economic and Social Council to examine the strengthening of institutional arrangements, including the United Nations Committee of Experts on International Cooperation in Tax Matters.’ Unfortunately, the term ‘strengthening’ is weaker than ‘upgrading’ the tax committee to an intergovernmental body.

The need to combat tax havens is not listed in the outcome document. The EU governments had included the need to ‘combat tax havens’ in their joint position for Doha. Nonetheless, this issue was already a casualty of the EU’s own internal divergence, as the UK, Ireland and Luxembourg strongly opposed it. The theme was consequently not picked up in the final document, despite the important role tax havens play in tax evasion strategies."


Links - Jan 12

** Also see our searchable archive of past story summaries, and Offshore Watch for more stories. **

Investment Tax Cuts Help Mostly the Rich
Jan 10 (NY Times) – According to a new study by the Congressional Budget Office, in 2005 the top one-tenth of 1 percent of taxpayers — a group that included those with after-tax incomes of more than $1.5 million — reported $335 billion in capital gains, or just over half the total amount of capital gains. By contrast, the bottom 95 percent of the income distribution — those with incomes under $126,300 — had just $69 billion in capital gains, about 10 percent of the total.

Why Are the Media More Interested in Blago Than in Unraveling the Bailout Mystery?
Jan 11 (Huffington Post) - As a GAO report last month concluded: "The rapid pace of implementation and evolving nature of the program have hampered efforts to put a comprehensive system of internal control in place. Until such a system is fully developed and implemented, there is heightened risk that the interests of the government and taxpayers may not be adequately protected and that the program objectives may not be achieved in an efficient and effective manner." The money is flying out the door but no one is watching where it's going. Naomi Klein adds more frightening stuff here.

A blue emerald
Jan 11 (FT) - Fired up by European Union investment, low corporation taxes and light regulation, the Irish attracted investment – and tax revenue – from around the world. But Ireland is now particularly exposed to the recession.

Probe widened on US banking violation
Jan 11 (FT) - A US investigation into potential sanctions violations has expanded to involve nine European banks. Authorities suspect that some of the money transferred through the American banking system might have been used to finance Iran’s nuclear and missile programmes.

Lloyds in $350m US settlement
Jan 9 (FT) _ Lloyds TSB will pay $350m to settle US investigations after admitting it enabled Iranian and Sudanese clients to access the US banking system in violation of US sanctions, prosecutors said on Friday. The process made it appear that transactions originated at Lloyds in the UK rather than the sanctioned banks

What to look for in proposed tax breaks
Jan 8 (Niemanwatchdog) - Multinationals are pushing to make it easier to shift profits abroad by replacing the Generally Accepted Accounting Principles we now use with International Financial Reporting Standards, which allow much greater “flexibility.” The press need to ask why we are not going to a worldwide tax system, sometimes called combined reporting, that would eliminate shifting profits overseas. They also need to ask whether it wouldn’t be far more stimulative to eliminate most of the corporate tax subsidies and lower tax rates on everyone.

Exxon CEO Advocates carbon Tax
Jan 9 (WSJ) - The chief executive of Exxon Mobil Corp. for the first time called on Congress to enact a tax on greenhouse-gas emissions in order to fight global warming. Rex Tillerson said that a tax was a "more direct, a more transparent and a more effective approach." How times change.


Friday, January 09, 2009

TJN's Murphy at number 25

Copied from Richard Murphy's Blog:

Someone has just drawn my attention to Accountancy Age’s Financial Power List for 2009. Of this it says:

In a year that will shape the future of the global economy, we look at the names to watch in 2009

And at number 25?:

Richard Murphy, tax campaigner, Tax Research Network

The public face of tax campaigning is often criticised for his controversial approach to tax issues. Of particular importance to Murphy is a globally recognised crackdown on low-tax jurisdictions, and his efforts in highlighting the issue have arguably lifted its importance on the government’s agenda.

Looks like they can’t decide if I’m Tax Research or Tax Justice Network on this occasion, but either way I make the customary, but totally appropriate point that this reflects the work of an awful lot of other people too, not least John Christensen and Prem Sikka. And my wife too - easily one of the most important but wholly unacknowledged people in this campaign.

It would also be good if they stopped referring to tax havens as low tax jurisdictions. They’re not. They’re promoters of regulatory abuse behind a veil of secrecy - which is something quite different - and tax is just one of the areas in which they undermine democratic governments in fulfilling their mandates.


International News - Jan 9

** Also see our searchable archive of past story summaries; and Offshore Watch for more stories. **

Sarkozy and Merkel warn on finance regulation
Jan 8 (FT) - President Nicolas Sarkozy and Chancellor Angela Merkel on Thursday warned the US and the banking industry not to thwart European efforts to tighten financial regulations this year. Ms Merkel told the conference that she would “react very strongly” if the financial community tried to block government efforts to tighten regulation.

Irish tax havens plan
Jan 7 (Manx Radio) - Islands off the coast of the Republic of Ireland could soon be competing with the Isle of Man, by going tax-free. 

The Gaeltacht Authority says a special tax incentive scheme could be introduced in the counties of Donegal, Mayo, Galway and Cork. 

One part of the scheme would see people living on the islands for at least six months each year could earn 100,000 Euros a year tax free for 10 years.

The plans have yet to be considered by the Irish government.

The danger from GATS
Jan 8 (Tax Research) - Linda Kaucher from the LSE writes on a GATS deal (General Agreement on Trade in Services). Signing up to GATS will make financial deregulation irreversible. Gordon Brown is the main proponent of financial deregulation. The push for the GATS came from transnational capital, mainly Citicorp, AIG, and American Express. Whatever the arguments on agricultural and manufactured goods, services liberalisation is another world - deeper, more intrusive meta regulation controlling and overriding national regulatory processes, and favouring the rights of big business over democracy.

Controlled by the corporations
Jan 8 (Guardian) - By Prem Sikka - The Companies Act 1985 (now part of the Companies Act 2006), subject to various formalities, allows companies to repurchase their shares. Companies could pay dividends (which attract income tax) but share repurchases are treated as capital gains, which attract considerable tax exemptions. Executive remuneration is also linked to share prices. Without creating an iota of additional wealth, directors can increase earnings per share, their bonuses and share options.

Pressured by I.R.S., UBS Is Closing Secret Accounts
Jan 8 (NY Times) - Under pressure from federal authorities, the Swiss bank UBS is closing the hidden offshore accounts of its well-heeled American clients, potentially allowing their secrets to spill into the open. UBS will transfer the assets to other banks or other divisions within UBS, or will mail checks directly to the account holders, creating paper trails for federal prosecutors.