My last blog post was about corporate efforts to hide money and dodge tax. We all know about the Amazons and the Starbucks but there is another avoidance strategy which is about how goods - or more accurately, how the services related to goods are located around the world. Corporations brand, insure, distribute in house. By so doing they can then charge themselves for these services which they offer to themselves. Such 'charges' are made in offices located in 'high tax' countries which are then offset as costs. When set against profits in a 'low tax' location, such as Luxembourg, this cynical and creative accountancy is yet another means by which companies get to avoid paying their way.
The only winner in this scenario is the corporation. Some only pay as little as 6% tax through this form of transfer pricing (or mispricing, given that companies can charge themselves what they like for their services to themselves). The original growers or manufacturers get a tiny fraction of the loot and any country with a respectable tax rate, including our own, loses revenue. The trillions lost through corporate robbery makes current austerity measures a joke.
So if anyone asks you why you like to buy fair trade you can tell them you are putting money directly into the hands of countries and the communities therein, enabling a fair day's pay for a fair day's work. Fair traders in this country also pay their taxes and contribute to the social systems and infrastructure that we all benefit from. Small steps, perhaps, but ones well worth taking.
If you want to see what fair trade can offer, why not visit the Radish Fair Trading Post?
Tuesday, 1 January 2013
My daughter is currently studying Animal Farm. This Orwellian fable seems so much a part of our lives that possibly we tend to take it for granted and be less aware than we should be of its messages. Certainly our own conversations about the novel have been confined largely to the themes and literary techniques within it; key players within the Russian Revolution, nature of leadership etc. However, it's ability to abide in our own present-day consciousness is not just because it offers us a history lesson in repetitive hegemony but because of the dangers it presents to us of a revolution led by a corruptible elite. We shouldn't let it escape us that though our country isn't in the grip of a brutal dictatorship, a 'Napoleonic' tour-de-force of terror, in some ways it's much worse than that. The brutality is covert and secret. The battlelines are drawn over the relationship between wealth and prosperity - and as we will see these can be mutually exclusive terms.
Having attended a presentation by forensic account John Christenson I began reading Nicholas Shaxon's "Treasure Islands". Now here is a must-read for any lapsing neoliberalist. It tells the tale of how Britain has spidered itself to the centre of a web of financial shannanigins so complicated that it's doubtful whether many of our current politicians - chancellors included - really know what's going on. 23 tax havens have the Queen's Head on their flags all of which are hell-bent on secreting away the wealth that the rest of us have been farmed to create.
Most of these havens are indeed islands. There is a good reason for this.
Shaxon: The ability to sustain an establishment consensus and suppress troublemakers makes islands especially hospitable to offshore finance, reassuring international financiers that local establishments can be trusted not to allow democratic politics to interfere in the business of making money. This groupthink did not originate in the island havens - these are merely fortified nodes in bigger global power networks led by Britain and other large powers but they have come to host and protect concentrations of anti-government, kick-the-poor attitudes that originate elsewhere, and allow them to flourish unchecked.
Christensen: The ruling classes realise they don't need to worry about the Democrats coming to power in the US, or Social Democrats coming to power in Germany, or Labour coming to power in Britain. They realised they didn't need to fight the fight at home. They already had this flotsam and jetsam of the empire strewn across the globe, with their red post boxes and British ways of life and incredible subservience to the English ruling class. Happy days. The city gentlemen had found a way around the threat of democracy.
Shaxon tells us that our determination to deregulate, and allow all manner of corporations and criminals (not necessarily the same thing) to move money out of the building makes us, essentially, one of the largest tax havens in the world. It goes beyond islands. It's like when those (mythical?) explorers went to look for the largest meteor crater in the world and discovered they couldn't see it because they were actually in it. Well, today the politicians talk about tax havens, and concomitant evasions as if they're something that's happening apart from us. In fact they're happening because of us - we're 'it'! The Treasury's attempts to dig us out of the crater of debt is laughably delusional. Not only does it not acknowledge our continuing collusion in letting trillions gush in and then out of our offshore jurisdictions, it seems to stands agape wondering why the sums don't add up. But it knows. It really does know. But this financial system is essentially ectopic - it at once uses the establishment to run outside of the establishment which is why politicians and treasuries cannot penetrate the web. Secrecy is the glue that weaves and holds the silk. It requires real courage and global co-operation to deal. Any party that is supportive of politicians who sit on company boards (and some sit on many company boards) is powerless to do anything other than maintain the status quo - as indeed reform in any form would work counter to their own personal interests.
Europe is making strides to shut down some of these loopholes - no wonder elements of the Tory Party want to get out. Where would they put their money? And further: since the crash of 2008 -which was born largely of the same forces of greed and acquisition - they still collude in the same lie that we're all in it together and that the poor should take its share. Well, why? Why on earth should the poor and the innocent pay anything? Why should we have to tolerate cuts and austerity and benefit losses when trillions are routinely being stashed away?
The pigs got away with it because they ensured the rest of the animals were kept too busy and too impoverished and too ill-educated and too frightened to ask the right questions and take even the most basic control over their lives. Even those who knew what was going on were too cynical or too vain and self-interested to take action. Orwell is as relevant as he's ever been and thank goodness that today there are still some minds prepared to #Occupy themselves with the issues, often doing nothing more than just sitting in front of a bank or a Starbucks and refusing point blank to be taken to the knackers yard.
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You can buy the books in this article from Radish our fully tax-paying independent online bookshop by clicking on the titles below:
Find out more here: Tax Justic Network