Cameron should ban offshore havens if he's serious about tax

Jun 22, 2012

Opinion digest: tax avoidance, Labour's immigration policy and the Tube

Cameron and Osborne thunder about the likes of Jimmy Carr, but seem terrified of confronting the legal schemes that allow tax avoidance, says Simon Jenkins in The Guardian. Revelations in The Times this week suggest that over £5bn a year may be lost to the exchequer in tax avoidance schemes. The single institution most useful to tax avoidance is the offshore haven. Companies from Amazon to Vodafone use them to avoid paying tax in Britain. "There is no moral or legal justification for individuals or companies doing business in Britain to avoid paying tax by buying a nameplate overseas." Tax dodgers protest they are "doing nothing illegal", and this is usually true. But no such excuse is available to politicians, who are the arbiters of legality. "They may excoriate tax avoidance, but they are the only people in a position to stop it."

This week Labour entered the immigration debate with apologies, says Ian Birrell in The Independent. The Shadow Home Secretary, Yvette Cooper, has apologised for her party's failure to introduce tougher controls on migrants while in office and today Ed Miliband will admit Labour got it wrong on immigration. The influence of the policy gurus is obvious. The "left leaning party is tilting towards the centre", and the tough talk on immigration aims to blur the image of Ed Miliband as an out-of-touch north London liberal. "These clunking steps are even worse coming from a man who makes such huge play out of his own back story as a child of refugees." Instead of apologising for failing to address people's fears, "Labour should be honest and spell out why the nation needed – and still needs – so many migrants".
Unfortunately, that would require the sort of real political leadership none of the major parties have.

Olympic visitors to London who use the Underground are in for a treat, says Andrew Martin in The Evening Standard. They will experience the Dickensian moodiness of the original Metropolitan, or the Edwardian jewel box stations in the West End, or the Sixties functionalism of the Victoria line with the yuppified Jubilee line extension. No system is more diverse – "or more paranoid". The paranoia is revealed in the form of the endless announcements. Hearing about the next station coming up or about significant delays is useful, "but a whole tower of babble has been built on top". There are warnings about thieves, requests to keep stations tidy, advice about Oyster queues. When the Central line became the first to use automated in-train announcements in the early 90s, the voice was nicknamed "Sonia" because she "gets-sonia-nerves". Sonia was a joke back then, "but now she's taken over and is doing nothing at all for the blood pressure of Londoners"

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As all but two of the largest top 100 British companies have set up shop in offshore jurisdictions, it's not exactly a suprise that the funding of loans would probably come from somewhere offshore. Furthermore as the UK's largest banks all have significant operations offshore, virtually all loans benefit from tax advantageous operations.
Anyone in the UK has the right to free choice providing that it's within the constraints of the law. Choosing how and where you invest your earnings or borrow legally is upto the individual, and I do not for a second believe this will change anytime soon.
If laws were to change and the top 100 British corporations, for example, were no longer able to take advantage of offshore jurisdictions there would be a very simple chain of events that would occurr--> The company's operation costs would go up as their income after tax would go down--> this loss would be past onto the consumers in the form of higher costs for the goods or services--> as the British population is already suffering from lower disposable income sales would go down--> if the demand for the goods or services go down then these leading employers (the top 100 largest companies) will cut you see where I'm going with this?
This is virtually mirrored should individuals be restricted on their interests offshore. Either they will cut their spending in the UK, which in effect will reduce the earnings of local businesses and service providers, or they will move all together, leaving a huge hole in the economy.
Offshore jurisdictions benefit everyone whether it be direct or indirectly. I understand that it may seem unfair or immoral to some, but believe me- if the tables were turned and you had a large pot of money, any intelligent individual would want the opportunity to maximise the take-home amount after tax.