A neo-liberal toll free Paradise for the super rich and tax hell for wage earners

Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs, arriving at the Economic and Financial Affairs Council, which took place on 7 November 2017, in Brussels. At the doorsteps he commented about the use governments and the EU can make of the revelations contained in the Paradise Papers. Snap shot from a video. Shoot date: 07/11/2017. (EU Audiovisual Services work, © European Union).

Despite the hullaballoo in main stream media about Queen Elizabeth’s investments in tax-havens and the implication of the US Trade Secretary Wilbur Ross in a Russia related offshore firm, the shocking revelation in the Paradise Papers is that London appears as the largest money washing machine of the world. The biggest single disclosure is that Apple, the most profitable US multinational is hiding her offshore wealth of $258 billion in the Channel island of Jersey, in direct link with the London City.

London loves money

The last crop of leaked financial documents, known as the Paradise Papers, revealed direct and strong links with Britain. London’s law and accounting firms, banks and other financial companies are the main agents advising their clients and clearing businesses with tax haven states, territories and islets. Some of the most important tax havens are situated only miles away from British shores.

At this point, it must be noted that the standard objections of the super rich with offshore accounts when exposed are not valid. They say their money is taxed somewhere in the world. For one thing, their wealth is usually not taxed where it is produced. Secondly, the returns from their offshore activities are always taxed with the ridiculous rates imposed by tax havens. On the contrary, wages are always taxed where they are earned. It’s also true that wages are taxed with much higher rates than profits.

14 million pages

The vast majority of the 14 million documents hacked by an unknown entity and distributed to 100 media around the world through the prestigious German newspaper Süddeutsche Zeitung belong to the high-status law and financial firm, Appleby. This is a prestigious company offering offshore financial and legal services to the super wealthy. The lowest amount one can invest through them is close to $1 million. Commissions and other expenses are high, making any smaller placement not worthy the costs.

Appleby operates from 10 offices around the world, of course preferring the tax haven locations. It’s the Isle of Man, Guernsey, Jersey, Bermuda, Cayman Islands, Bermuda, the British Virgin Islands, Shanghai, Hong Kong, Mauritius and Seychelles. It all started in 1860 by an English ‘gentleman’ Major Reginald Appleby. It grew slowly and carefully and today offers its services to banking giants like Citibank, Credit Suisse, Goldman Sachs, HSBC Bank, JPMorgan Chase, Lloyds Banking Group, the Royal Bank of Scotland Group, Santander UK, Standard Chartered and others.

First class services

Naturally, global accounting firms like KPMG and PricewaterhouseCoopers (PwC) are regulars for Appleby’s ‘engineering’. In close collaboration with banks they devise tax evasion schemes. While last years’ Panama Papers were about the small fish, this years’ Paradise Papers are exposing the big sharks, like Bono, the R.E.M. frontman. In short, the banking leviathans and large auditing and law firms offer ‘one stop shop’ for high level offshore banking and investment services to wealthy individuals and companies. It is true that Appleby is considered to be the most ‘prominent’ offshore services provider, with a meticulous mentality.

Actually, the Paradise Papers contain a revelation about the firm trying to ‘educate’ its personnel. According to BBC, “even before this huge leak of documents exposing the law firm’s business, Appleby appears to have had concerns about its standards”. It was about “a presentation to its staff in Bermuda in 2012, itself found in the Paradise Papers leak, appears to acknowledge the company may have taken on risky business, referring to concerns around “non-compliance” with its regulatory obligations, including anti-money laundering policies”.

“Doing our job”

After the publication of the Papers, Appleby issued a Press release saying it has “thoroughly and vigorously investigated the allegations and we are satisfied that there is no evidence of any wrongdoing, either on the part of ourselves or our clients”. However, the firm accepts ‘mistakes’ may occur. So it added, “It is true that we are not infallible. Where we find that mistakes have happened we act quickly to put things right and we make the necessary notifications to the relevant authorities.” In no case though the authorities in Europe or the US were ever informed directly by Appleby, that one or more of its customers evade taxation or launder money. They must be using the widest definitions of what tax avoidance or money laundering is.

However, the cries about far away tax paradise islands and territories overlook the equally effective tax evasion wise opportunities in the heart of Europe and the US. Switzerland, Britain, Ireland, Luxembourg, Holland and other European countries along with some US states like Nevada, Delaware, Montana, South Dakota, Wyoming and New York in some respects offer ‘competent’ and more secure tax evasion or money washing ‘solutions’ for the super rich than the Bahamas or the Cayman Islands.

Who is a better cleaner?

Equally astonishing and utterly disappointing for the hard working and heavily taxed millions of the world, is the fact that governments in Europe and the US do not seem to effectively react to such revelations. The last time an important initiative by a leading Western politician was undertaken towards taxing wealth ‘in situ’, where it is produced, was David Cameron’s outburst against the technology firms like Google, Apple and Facebook operating in Britain and being taxed elsewhere in the world.

Unfortunately, he didn’t have the time to prove that he meant what he said. He lost the Brexit referendum of June 2016 and disappeared for good from the British political scenery. As a result, the mega-banks, the specialized law firms and the accounting multinationals in London are always free to offer their clients offshore services and tax avoidance plans.

Supporters of tax fraud

All in all, for as long as the ‘laissez faire laissez passer’ neo-liberal ideology and policy options are ascendant, there will be no effective control of tax-evading and money washing practices. Trump who was elected on a ticket to “drain the Washington’s swamp” is doing exactly the opposite. He has accepted the banking lobby requests to abolish the few checks and controls imposed on US lenders after the 2008-2010 financial crisis. It’s a flagrant swindle of the American voters. The New York banks are wholesalers in offshore banking and tax-avoidance techniques. In Europe, Jean-Claude Juncker the head of the European Commission, as Prime Minister and minister of Finance of Luxembourg from 1989 to 2013 introduced the special ‘tax agreements’ scheme for the super rich to hide their wealth in his tiny country.

In conclusion, there is not a chance for an effective arrest of the wealth drain towards the tax paradises, for as long as the movements of capital continue to be completely free and straightforward. Or, for as long as neo-liberals like Juncker or swindlers of the Trump kind continue governing our brave new world. Wages are being more heavily taxed than profits and politicians don’t seem to mind. This was evident last Tuesday in Brussels at the ECOFIN Council of the 28 EU ministers of Finance.

 

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

It’s time to gang up: a personal conflict on discrepancies in the medical community

What is inclusive capitalism, and why does it matter?

Taxation: Commission refers Hungary to the Court for failing to apply the minimum EU excise duty on cigarettes

The EU Commission predicts a decimated growth in the next years

‘Massive and protracted’ humanitarian crisis in DR Congo can be ‘beaten back’ if donors step up

Fighting against the Public Health System dismantling means guaranteeing assistance to all

How trade wars pose a threat to the global economy

EU-US Privacy Shield data exchange deal: US must comply by 1 September, say MEPs

Environmentalists have removed nearly 40 tonnes of trash from the Pacific

Taxation: Commission refers Poland to Court for failing to remove certain tax exemptions on the use of energy products by highly polluting businesses

India’s strategy in space is changing. Here’s why

Why embracing human rights will ensure Artificial Intelligence works for all

These German businesses are hiring refugees to plug the skills gap

A safer, more dignified journey for all migrants, tops agenda at global conference in Marrakech

The EU learns about fishing and banking from tiny Iceland

Is China about to launch its own cryptocurrency?

Trade in fake goods is now 3.3% of world trade and rising

Germany is turning its old mines into tourist hotspots

One in three fish caught never gets eaten

Trade barriers: EU removes record number in response to surge in protectionism

ECB ready to counter the rise of the euro?

The world needs a grand coalition to tackle climate change

From coca to cocoa: three lessons from Peru on how farmers can leave the drug trade behind

The world condemned by neo-liberals to feed trillions to banks: the New Deal exorcised

‘Habitual residence’ rules deprive EU workers from social benefits

South Africa’s economy in 5 charts

These countries have the most expensive childcare

Parliament backs measures to cut e-commerce VAT fraud

Commission launches new tool to support digital teaching and learning in schools

Chart of the day: This is how many animals we eat each year

Health conditions for citizens of Yemen’s key port city ‘remain critical’ says UN agency

Asia and Pacific on course to miss all Sustainable Development Goals, says UN region chief

The EU-US trade agreement, victim of right-wing extremists and security lunatics

Statement by OECD Secretary-General Angel Gurría on the outcome of COP 25

EU opens a third antitrust file against Google

These are the 4 most likely scenarios for the future of energy

Here’s how the EU is doing on gender equality

Everything you need to know about the coronavirus

Sweden well ahead in digital transformation yet has more to do

How should cities prepare for self-driving cars? Here’s a roadmap

The EU resumes budget support assistance to the Republic of Moldova

Main results of EU Environment Council, 25/06/2018

Rising insecurity in Central Africa Republic threatens wider region, Security Council told

Has the EU economy truly revived from the financial crisis?

UN, global health agencies sound alarm on drug-resistant infections; new recommendations to reduce ‘staggering number’ of future deaths

Some endangered languages manage to thrive. Here’s how

Is “Sustainable Development” a concept that integrates Health Literacy and Health Policy as a global health action?

GSMA Mobile 360 – Africa on 16-18 July 2019, in association with The European Sting

Four things Turkey did for business in the G20

JADE Spring Meeting Live Coverage: Entrepreneurial skills in the digital markets

Why did Cameron gain absolute majority? What will he do now? Will he vote ‘yes’ in Britain’s in – out EU referendum?

Gaza investigators call on Israel to review ‘rules of engagement’ as Gaza protest anniversary looms

Egypt urged to free prominent couple jailed arbitrarily since last June: UN rights office

Hiring is broken. Here’s how to fix it

ECB with an iron hand disciplines the smaller Eurozone member states; latest victim: Greece

Advanced economies still have plenty of work to do to reach Sustainable Development Goals

The Five Chinese Girls

Intervene, don’t overthink – the new mantra of systems design

A day in the life of a Rohingya refugee

The reverberation of permanent multiprofessional education in combating antimicrobial resistance: future generation prognostic change

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s