Wednesday, September 23, 2009

Cable: the offensive secrecy of tax havens

Amid all the confusion and recrimination of the global economic people, there is one thing that most people seem to agree on in Britain: that one of the country's most prescient politicians is Vince Cable, deputy leader of the Liberal Democrats.

This is what The Economist had to say about him in April:

"By some measure, Mr Cable, the economics spokesman of the Liberal Democrats, the smallest of Britain’s big three political parties, is the most popular politician in Britain. In any putative government of national unity, he would be the default choice to be chancellor of the exchequer. What is all the more remarkable about Mr Cable’s improbable standing is that he is admired in almost equal measure by other politicians and a cynical public."

Here is another assessment:

"He is one of the most respected politicians of our age. His predictions about the recession have been nothing short of prophetic; he made the nation laugh by comparing Brown to Mr Bean; and I am yet to watch an episode of Question Time where any debate about the financial situation hasn’t included a comment along the lines of “maybe we should all just listen to Vince Cable”.

Now what does Cable have to say about tax havens? Now we have a good idea, from his latest article, "The offensive secrecy of tax havens." It is worth reading in full, though perhaps we'll select just this excerpt for now.

"Much of the shadow banking sector, a major contributor to the economic crisis was also only possible because of tax haven secrecy. At the G20 summit in London earlier this year, what some saw as the beginning of the end of the tax havens was agreed, with sanctions proposed for those that fail to comply with international standards. Yet the standards that have been set are hopelessly lacking in ambition and largely exclude developing countries."

Read more about this here. Cable's article says:

"Gordon Brown has made valiant efforts to build a legacy of caring for the poor in developing countries by prioritising debt cancellation and overseas aid commitments. An end to tax haven secrecy may be his last opportunity to ensure that legacy endures. He should seize the chance at the G20 to make the case persuasively."

Quite so.


Blogger Physiocrat said...

Cable has blown his reputation by airing a ridiculous proposal for a special tax on houses worth over £1 million.

Building costs are, at most, £1000 a square metre so that would be a house 1000 square metres in area, about 10 times the size of the average house - with about 30 bedrooms, we are talking about palaces.

2:28 pm  
Anonymous TJN said...

No he hasn't. He irritated a few Lib Dems by not consulting with them first, and irritated a few others by not fleshing out his proposals as fully as they would like. This does not constitute "blowing his reputation."

11:38 pm  
Blogger Physiocrat said...

It is very foolish, though not unusual, of any politician to put forward proposals without considering how they would work in practice. Cable ought, as a shadow Chancellor, to have been sufficiently perceptive to ask exactly how this was meant to be implemented.

Threshold property taxes are arbitrary and lead to endless disputes at the margin. A complete valuation of all properties known to be worth more than £800,000 is going to be required, and it could also be evaded by a bit of constructive demolition. Threshold property taxes are also indicative that they are not grounded on any principle. Thresholds can be justified on the de minimis principle but a £ million threshold is not de minimis. Putting forward a silly ad hoc proposal such as this cannot possibly have enhanced his reputation.

The yield will be tiny.

In the past Cable has actively supported straightforward land value taxation. Not only is this an unwelcome diversion, it also means that he is not going to be taken seriously when he speaks for LVT. It is most unfortunate.

12:15 am  

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