George Osborne

Eurobond tax scandal: David Cameron accused of dodging concerns over loophole that costs Treasury at least £500m a year

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http://www.independent.co.uk/news/uk/politics/eurobond-tax-scandal-david-cameron-accused-of-dodging-concerns-over-loophole-that-costs-treasury-at-least-500m-a-year-8899864.html

Prime Minister refuses to explain why he hasn’t stopped use of Eurobond exemption

cameronunhappyGETTYDavid Cameron’s attempts to “brush aside” legitimate concerns that the Government has not yet closed a legal tax loophole, which is losing the public purse at least £500m a year, have been condemned by MPs and campaigners.

When asked at Prime Minister’s Questions about revelations in The Independent that the Coalition had failed to stop the use of the quoted Eurobond exemption to avoid tax, Mr Cameron said decisions had been made by the Treasury and implied that was the end of it.

Shabana Mahmood, Labour MP for Birmingham Ladywood and shadow Exchequer Secretary to the Treasury, said: “It’s pretty shocking that David Cameron just brushed aside this important question. We’re talking about a loophole that costs us around half a billion a year, yet the Prime Minister arrogantly dismisses the issue. At a time when families are facing a cost-of-living crisis and the deficit is high, this isn’t good enough.”

She added: “David Cameron and George Osborne must explain why they decided not to close this loophole. And we need a government that takes tax avoidance seriously and is on the side of the majority of families and businesses who pay their fair share.”

The campaign group UK Uncut says it is now considering targeting the high-street chains highlighted in The Independent, which include Nando’s, Pizza Express, Café Rouge, BHS, Maplin, Office and Pets at Home. The companies all cut their taxable profits by borrowing at high interest from their owners through the Channel Islands Stock Exchange.

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27/11/13 Having received a takedown notice from the Independent newspaper for a different posting, I have reviewed this article which links to an article at the Independent’s website in order to attempt to ensure conformance with copyright laws.

I consider this posting to comply with copyright laws since
a. Only a small portion of the original article has been quoted satisfying the fair use criteria, and / or
b. This posting satisfies the requirements of a derivative work.

Please be assured that this blog is a non-commercial blog (weblog) which does not feature advertising and has not ever produced any income.

dizzy

Continue ReadingEurobond tax scandal: David Cameron accused of dodging concerns over loophole that costs Treasury at least £500m a year

Eurobonds scandal: The high street giants avoiding millions in tax

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http://www.independent.co.uk/news/uk/politics/eurobonds-scandal-the-high-street-giants-avoiding-millions-in-tax-8897591.html

Many of Britain’s best-known high street chains are avoiding millions of pounds in tax through the controversial Eurobonds scheme.

Food chains including Nando’s, Pizza Express, Café Rouge, Strada and Pret A Manger have cut their taxable profits by borrowing from their owners through the Channel Islands Stock Exchange. High street retailers doing the same include BHS, the electronics retailer Maplin, Office and Pets At Home. The revelations form the third part of an investigation by Corporate Watch and The Independent into major UK companies using the quoted Eurobond exemption, a regulatory loophole the Government knows about but has decided not to close.

David Cameron is expected to be questioned today in Parliament about the scheme and HMRC’s failure to tackle it. Instead of putting their money in the shares of the companies they buy, the owners – mostly private equity funds – lend it instead. The interest on the loans cuts the UK companies’ taxable income each year and the exemption – triggered because the loans are listed on the Channel Islands Stock Exchange – means the interest goes to the owners tax free. Without this loophole, HMRC could deduct a 20 per cent “withholding tax” from payments overseas and the overall tax saving would be greatly reduced. Yesterday The Independent reported how Camelot had avoided tax using this method and how HMRC was lobbied by financial firms to keep the loophole open.

Murray Worthy, a tax campaigner with War on Want, said: “This isn’t just a niche issue that’s being used by a handful of companies. We’ve seen how angry people are about the ease with which these companies can avoid paying their fair share, [and] the only reason this is happening is because of the influence of big business on the Government’s tax rules.” Gondola Group – which owns Pizza Express, Zizzi and Ask – has avoided as much as £77m in UK corporation tax since it was bought by the Cinven private equity fund in 2006. Cinven loaned Gondola more than £300m at a 12.5 per cent interest rate but only invested £8m in equity. Instead of receiving the interest payments on the loans every year, Cinven has allowed it to accrue on the debt, compounding the amount taken off Gondola’s profits every year. When Cinven sells the restaurants, which it is reportedly considering, it can receive the £276.8m it is owed tax free.

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27/11/13 Having received a takedown notice from the Independent newspaper for a different posting, I have reviewed this article which links to an article at the Independent’s website in order to attempt to ensure conformance with copyright laws.

I consider this posting to comply with copyright laws since
a. Only a small portion of the original article has been quoted satisfying the fair use criteria, and / or
b. This posting satisfies the requirements of a derivative work.

Please be assured that this blog is a non-commercial blog (weblog) which does not feature advertising and has not ever produced any income.

dizzy

Continue ReadingEurobonds scandal: The high street giants avoiding millions in tax

Borrowing figures show how Osborne allowed thousands to avoid 50p tax rate

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http://www.newstatesman.com/politics/2013/10/borrowing-figures-show-how-osborne-allowed-thousands-avoid-50p-tax-rate

The spike in tax receipts was caused by individuals deferring income and bonuses to benefit from the new 45p rate, not a surge in earnings.

By George Eaton

george_osborne

The latest borrowing figures are being trumpeted by the Tories as evidence of the success of George Osborne’s economic plan, with tax receipts up by 7% compared to last year. But what they won’t mention is that this spike has more to do with high earners avoiding the 50p tax rate than it does with any rise in earnings. By deferring income and bonuses from 2012 until this year to take advantage of the new 45p rate, taxpayers have caused a £2.9bn increase in receipts. But with earnings growth of just 0.7% in the most recent month, it’s far from certain that this improved trend will continue.

As the OBR notes in its commentary on the figures:

Growth in both income tax and NICs for the year-to-date is above the full year forecasts, but this largely reflects the fact that receipts in the first few months of the year benefited from the deferral of some income/bonuses to take advantage of the reduction of the additional rate of income tax to 45p and some temporary effects in non-PAYE income tax. Prospects for PAYE and NIC receipts growth will depend on the feed-through from the low growth in average weekly earnings in the latest data.

The IFS similarly warns:

It is important to note that some of the strong growth in receipts observed earlier in the year may not be expected to persist for the rest of the financial year, as it may be the result of some high income individuals pushing part of their income from last year into the beginning of this tax year in order to take advantage of the reduction in the higher rate of income tax.

And with individuals paying tax at 45p, rather than 50p, the Exchequer is left out of pocket. Osborne’s stated justification for abolishing the 50p rate was that, due to mass avoidance, it raised “just a third of the £3bn” expected. But while it’s true that £16bn of income was shifted into the previous tax year  – when the rate was still 40p – this was a trick the rich could only have played once. And as the government has acknowledged on other occasions, tax avoidance isn’t an argument for cutting tax, it’s an argument for stopping avoidance.

Having falsely claimed that the (anomalous) first year of the 50p rate proved that it was ineffective, the Tories are now using the (anomalous) first year of the 45p rate to argue that they were right to scrap it. We’ll never know how much the 50p rate would actually have raised – and that is just as Osborne intended.

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Continue ReadingBorrowing figures show how Osborne allowed thousands to avoid 50p tax rate

Bank of England gives yet another £50B to bankers

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“…quantitative easing – printing money by another name – is the last resort of desperate governments when all other policies have failed.”

George Osborne, speech January 9 2009

The Bank of England announced today that it intends to do a further £50billion round of Quantitative Easing. Quantitative Easing involves pumping money into the economy in an apparently futile – it hasn’t yet been shown to work – attempt to stimulate the economy. There is a problem that there is very little to show for so many billions after billions that have already been squandered on Q.E.

It appears that it’s austerity for the vast majority and rolling in lolly for the rich elite. No money for the NHS for the plebs, plenty of billions to stimulate the markets for rich multi-millionaire traders and bankers to get yet richer.

There is an argument that the poor would stimulate the economy far more – since they would have to spend the money.

 

 10/2/12:

Quantitative Easing is stimulating commodity trading, not the real economy

As the economy slides towards recession, the Bank of England today announced today it was creating a further £50bn worth of ‘quantitative easing’ (QE).

If you read articles on the topic in the media, you will see statements like “the Bank is ‘printing’ money” or the Bank  will “pump a further £50 billion in to the economy”.  Both these statements are misleading.

QE actually involves the Bank of England buying financial assets – usually government bonds – belonging to institutional investors and sitting in Banks. The Bank buys these assets with newly created central bank reserves.  These reserves can only be held by banks – they do not and cannot go to businesses the real economy.

As explained in nef’s Where Does Money Come From?, central bank reserves are used by commercial banks to settle payments with each other.

By ‘pumping’ more reserves in to the intra-bank clearing system the idea is that banks will feel more confident about making loans to the real economy because they will know that other banks are in a stronger position to settle with them.

In addition, by buying up ultra-safe government bonds in vast quantities and thus pushing down the yield (the interest received on holding) on these assets, the central bank hopes to encourage investors to buy higher yielding corporate bonds – which again provides money for real businesses.

QE may reduce long-term interest rates, but there is little evidence it has stimulated commercial banks to start lending more to businesses, in particular small businesses, or soften the conditions banks are attaching to loans.

In fact the most recent figures published by the Bank show that net lending – the amount of loans minus the amount repaid – to small businesses has contracted by six per cent in the year to November 2011. And this despite the banks being given small business lending targets by the government through ‘Project Merlin’.  Not much wizardry there then.

The hard truth is that commercial banks are still in a process of ‘de-leveraging’, more keen on getting their loans repaid and building up their capital base than making new loans to productive businesses in what is perceived to be a risky real economy.

Evidence suggests the additional funds provided by QE are more likely to be used by banks to create more speculative credit, not least commodity speculation,  that provides shorter term returns.  As a result, the money supply in the real economy is contracting just at the point where new investment is most needed.

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Continue ReadingBank of England gives yet another £50B to bankers

A good year for the Rich and it’s only February

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This article by Cut n Paste from http://bristol.indymedia.org.uk/article/703298

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Bristol loses 28million pounds worth of services and big business has a great month of bonuses (paid for by us) and tax breaks, while at the same time announcing  job cuts for thousands of people.

So first up we have Lord Oakeshot resigns as treasury spokesmen moves to back benches in disgust at Osborne’s farcical Project Merlin which will lead to bankers receiving huge bonuses again.

Barclays boss, Bob Diamond will get a bonus of least £8m, they are planning to cut about 4,000 jobs in its retail bank.

Stuart Gulliver of HSBC at least £9bn.

Stephen Hester, chief executive of Royal Bank of Scotland, is to take a £2.04m bonus for last year at the same time they are making plans to cut 2,300 jobs, which ironically they announced only hours after its former chief executive Sir Fred Goodwin had publicly apologised for the Edinburgh-based bank’s downfall.

Eric Daniels, his soon-to-depart counterpart at bailed-out Lloyds Banking Group, is to receive £1.45m,  while the Lloyds Banking Group is also expected to cut thousands of jobs.

As the Guardian states:

Oakeshott, a former City financier and a close ally of Cable’s, had been scathing. Speaking while still a Liberal Democrat Treasury spokesman, he laid into the Treasury’s negotiators saying: “They’ve got an awful combination of arrogance and incompetence, most of them couldn’t negotiate themselves out of a paper bag.”

Oakeshott, who was not in the government but spoke for the junior coalition partner on Treasury matters in the Lords, stood down shortly after he criticised officials working on the government’s deal with the bankers and said: “If this is robust action on bank bonuses, my name’s Bob Diamond.”

So massive bank bonuses and huge job cuts seem to be the deal of the day.

http://www.guardian.co.uk/politics/2011/feb/09/lord-oakeshott-quits-banking-deal

Then we have a change in Tax law that massively benefit the rich and means we lose out hugely in tax revenues which could fund public services and stop cuts.

As George Monbiot states in the Guardian:

“At the moment tax law ensures that companies based here, with branches in other countries, don’t get taxed twice on the same money. They have to pay only the difference between our rate and that of the other country. If, for example, Dirty Oil plc pays 10% corporation tax on its profits in Oblivia, then shifts the money over here, it should pay a further 18% in the UK, to match our rate of 28%. But under the new proposals, companies will pay nothing at all in this country on money made by their foreign branches.

Foreign means anywhere. If these proposals go ahead, the UK will be only the second country in the world to allow money that has passed through tax havens to remain untaxed when it gets here. The other is Switzerland. The exemption applies solely to “large and medium companies”: it is not available for smaller firms. The government says it expects “large financial services companies to make the greatest use of the exemption regime”. The main beneficiaries, in other words, will be the banks.

But that’s not the end of it. While big business will be exempt from tax on its foreign branch earnings, it will, amazingly, still be able to claim the expense of funding its foreign branches against tax it pays in the UK. No other country does this. The new measures will, as we already know, accompany a rapid reduction in the official rate of corporation tax: from 28% to 24% by 2014. This, a Treasury minister has boasted, will be the lowest rate “of any major western economy”. By the time this government is done, we’ll be lucky if the banks and corporations pay anything at all. In the Sunday Telegraph, David Cameron said: “What I want is tax revenue from the banks into the exchequer, so we can help rebuild this economy.” He’s doing just the opposite.

So how did this happen? You don’t have to look far to find out. Almost all the members of the seven committees the government set up “to provide strategic oversight of the development of corporate tax policy” are corporate executives. Among them are representatives of Vodafone, Tesco, BP, British American Tobacco and several of the major banks: HSBC, Santander, Standard Chartered, Citigroup, Schroders, RBS and Barclays.

Reading Treasure Islands, I have realised that injustice of the kind described in this column is no perversion of the system; it is the system. Tony Blair came to power after assuring the City of his benign intentions. He then deregulated it and cut its taxes. Cameron didn’t have to assure it of anything: his party exists to turn its demands into public policy. Our ministers are not public servants. They work for the people who fund their parties, run the banks and own the newspapers, shielding them from their obligations to society, insulating them from democratic challenge.

Our political system protects and enriches a fantastically wealthy elite, much of whose money is, as a result of their interesting tax and transfer arrangements, in effect stolen from poorer countries, and poorer citizens of their own countries. Ours is a semi-criminal money-laundering economy, legitimised by the pomp of the lord mayor’s show and multiple layers of defence in government. Politically irrelevant, economically invisible, the rest of us inhabit the margins of the system. Governments ensure that we are thrown enough scraps to keep us quiet, while the ultra-rich get on with the serious business of looting the global economy and crushing attempts to hold them to account.”

http://www.guardian.co.uk/commentisfree/2011/feb/07/tax-city-heist-of-century

And finally surprise, surprise The Con Dem government is full of ex wankers oh sorry bankers as the Mirror states:

“Our investigation found that of the 498 Tory MPs and peers 134 have been or are employed in the financial sector, this includes 70 of the party’s 305 MPs. Among the 193 Conservative peers, more than a third work or have worked in finance or banking. The Tories also stand accused of introducing laws that give a full tax exemption for British companies’ tax haven branches and letting them get away with an 8% tax rate for profits diverted to havens through internal financing. Altogether there are more Tory MPs who have been on the banks’ payroll than the total number of Lib Dem politicians. Labour MP Tristram Hunt said: “The Conservative Party is as much as ever the preserve of a small elite of professions of which financial services is by far the largest.”

Among the Cabinet members with links to the City are Pay-master General Francis Maude, who has worked for Solomon Bros and Morgan Stanley; Leader of the House of Lords, Lord Strathclyde who was chair of Trafalgar Capital Management from 2001-10; Cabinet Office minister Oliver Letwin, who worked for NM Rothschild & Son from 1986-2009; International Development Secretary Andrew Mitchell, who worked for Lazard Bros from 1979-2009; and Commons Leader Sir George Young, who worked for the Samuel Hill merchant bank.

Eleven Tory MPs and peers have worked for Barclays, including Richard Bacon MP, Jesse Norman MP, former Chancellor Lord Lawson, Earl Howe and Andrea Leadsom MP. A further eight Conservatives have been at Rothschild, including John Redwood MP, Mark Garnier MP, former Chancellor Lord Lamont and Jacob Rees-Mogg MP.

And four worked for Lehman Bros, the company whose collapse sparked the financial crisis.”

http://www.mirror.co.uk/news/politics/features/2011/01/10/conservative-party-links-to-fat-cat-bankers-revealed-by-daily-mirror-investigation-115875-22838080/

So there you have it a great year so far for a corrupt regime filling its own pockets and setting themselves up for a nice chief executive / consultant job in the finance sector.

See that our ex prime minister sorry war criminal Tony Blair has a nice cushy job at JP Morgan  (only £5 million a year, must e a hard life) who were instrumental in the financial crisis and are currently destroying the world with their financial terrorism.

http://news.bbc.co.uk/1/hi/business/7186975.stm

Continue ReadingA good year for the Rich and it’s only February