Another Tax Scandal



How much tax do you pay? Do you even know? Do you begrudge it or willingly contribute to the public services which benefit us all? Attitudes to tax have undergone rather a transformation in recent years, starting with campaigns by NGOs like Christian Aid. And these days, cuts in public services brought about by the government’s austerity politics don’t sit well with revelations about multi-national corporations’ tax dodging.

So now, tax isn’t dull and boring, or even taboo anymore. It’s on everyone’s lips, it’s making people angry, it’s considered a matter of justice. And what we’re really worked up about is the fact that some big companies, which seem to be doing pretty well for themselves, operating in the UK , benefitting from our infrastructure, aren’t paying any tax. They aren’t giving anything back. Google, Starbucks, Amazon, by clever accounting, have avoided their tax responsibility, while hard-pressed citizens are contributing while their wages are frozen and their hours are cut.

I watched a film last week which showed up how the UK is at the heart of global financial markets and at the heart of systematic global tax dodging. “The UK Gold” is an award-winning film by Mark Donne and Joe Morris and uncovers what is going on under our noses in the City of London.

The film shows, that as the British Empire disappeared, outposts remained in places like the Cayman Islands, Bermuda and British Virgin Islands. Here, laws are passed which are much more for the benefit of other people than the local residents, allowing businesses to record activity there which happens elsewhere. Profits are recorded where tax rates are low or non-existent, et voila! The tax haven is born.

But it doesn’t stop there. For me, the real scandal is not what goes on in a far-off sea, but what happens much closer to home. Most companies in the FTSE 100 index have subsidiaries in tax havens. It is these links in the Caribbean, Singapore and Hong Kong which make the City of London so desirable. Whatever the government might say, the City of London has no interest in closing tax loopholes or opening up tax havens to greater scrutiny, or shutting down their existence altogether. And the City of London is pretty good at protecting its own interests.

The UK Gold shows a vicar from Hackney trying to get elected to one of the wards in the square mile of the City of London. The City has its own authority, its own version of democracy (where businesses have far more votes than residents), even its own police and Lord Mayor (not Boris Johnson!). And just to make sure government doesn’t do anything silly like pass a law which might allow some of the trillions of pounds which pass through the city actually benefit the rest of the country, it has its own special seat in the House of Commons and House of Lords. Not a democratically elected seat, but a special one, right next to the Speaker, called the City Remembrancer, so he (and it will be a he) can whisper in the Speaker’s ear and lobby for vested interest in the very heart of our instruments of democracy. I don’t suppose the enormous wealth of the City of London will be included in restrictions on funds spent on lobbying on election issues within 12 months of an election in the proposed gagging law

I had a mix of emotions after the film – ranging from weary cynicism that the world was ever thus, through a despair of impotence, to indignant rage that we are being fleeced right under our very noses. But Billy Bragg, speaking from the mainstage at Greenbelt, said that cynicism is our biggest enemy, and organisations like Christian Aid and Oxfam mean that our rage can be put to work, rather than leaving us impotent.

Things are changing. Crown Dependencies and Overseas Independent Territories have had to sign agreements to disclose information to tax officers and not keep it secret. This came about under the pressure of the Enough Food for Everyone If campaign. David Cameron recently announced that the real (“beneficial”) ownership of countries will have to be recorded and the list made available to the public in the UK. This has been the subject of Christian Aid’s latest campaign. Uncovering the secrecy is the first step to holding businesses and people to account, and campaigning is making a difference in this area. You can join Christian Aid’s campaign to make the beneficial ownership information public in the rest of the Europe here. And we can keep talking, blogging, asking, writing to our MPs, keeping the tax on the agenda. Because that money has been stolen from us, from our public services. And not just in this country, but all round the world. Christian Aid estimates that $160 billion is lost to poor countries every year – much, much more than they receive in overseas aid, and that really is a scandal.


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