21 Sep 2012

Guardian : UK politicians with links to tax havens

Hats off to the journalists at the Guardian who today released a list of no less than 68 UK politicians who are linked to companies that make use of taxhavens. There are 27 Tories - six of whom are MPs – 17 Labour peers, three Lib Dem peers and another 21 are either crossbench or non-affiliated peers. These people are either directors or non-executive directors of companies linked to tax-havens such as the Cayman Islands. Clearly, with so many politicians having a vested interest in keeping the current system on the rails, it will not be easy to get reform.

The Guardian also leads with the news that the Tory party treasurer, Lord Fink, has been campaigning to get the UK turned into a tax haven. He disclosed that "that he had lobbied George Osborne for a cut in taxes on invisible earnings so that he and other hedge funders no longer feel obliged to set up companies in places such as the Cayman Islands."

Actually, I'm inclined to agree with him. Yes, the government could indeed turn the UK into a tax-haven. As I have repeatedly argued, if the UK introduced a tiny tax on financial transactions it could abolish corporation tax, income tax and VAT. Financial transations going through the City of London are currently running at someting like £1.7 quadrillion a year. You would only need to tax that at about 0.03% to replace all the other taxes.

So, why don't the 68 press for such changes? Well, I suspect that one reason is that they have never even imagined that such an option is possible. But the other reason is that many of the people who use tax-havens need to be able to do their transactions without the authorities knowing what they are up to.

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