One side effect of Brexit and post Brexit Britain is that tax evasion is back to being out of sight and out of sight. Now it may be a matter of semantics and legality when it comes to the differences between tax evasion from tax avoidance, one is a criminal act and one is permitted under the law.
It is a matter of public record that our former PM was against aggressive tax avoidance schemes. He was once pretty forthright in stating that tax evasion is illegal, and that people can be prosecuted for that, and people can go to prison – so his relative silence and inaction on tax avoidance may be telling
It is also a matter of public record that the former Con Dem government’s ideologically driven public sector spending seriously cut staffing levels in HM revenue and Customs. The PM interestingly enough was firm enough when it came to rejecting calls for particular individuals to be stripped of public honours for wrongdoing.
Obviously from the perspective of the Westminster elite, if you started stripping individuals of titles and honours for wrong doings, who knows where it might end - even the possibility of former Conservative and former Labour and Lib Dem party donors ending up embarrassed. Previously various Westminster governments of various political hues have been more than a little half-hearted when it comes to clamping down on tax avoidance or fiscal consolidation.
It has certainly gone quiet since TM’s pronouncements back in June 2016 about tax evasion and social justice, mind she has a lot on her plate politically. The previous PM may have slagged off celebrities, for using a tax avoidance scheme in Jersey. Yet he was very reluctant to deal the tax havens that happen to be UK Crown Dependent territories.
Successive Labour and Tory governments have regularly turned a blind eye to this problem allowing the UK's tax gap to grow to an eye-watering £34 billion each year. Total fiscal consolidation over the course of the 2010 – 2015 Parliamentary term amounts to some £120 billion pounds, which gives an indication of the scale of the scandal.
The last Labour UK Government (back in 2005) managed to merge the Inland Revenue and Customs and Excise and then proceeded to cut a nearly a third of jobs in five years (99,000 to 68,000). The party formerly known as New Labour also happily slashed the budget for tackling the tax gap by nearly 50% (£3.6 bn to £1.9 bn) between 2006-10.
Now most reasonable people accept that there is a real need to deal on a global basis with the problem of off-shore companies and those individuals who are actively engaged in tax avoidance, tax evasion and / or money laundering. It is all a little embarrassing as the UK is at the heart of the problem and consciously chosen not to regulate its own crown dependencies let alone the iffy if not criminal goings on in the City.
The scale of the on-going off-shore tax avoidance problem can leave you breathless. The Cayman Islands are home to some 12,000 corporations yet have a resident population of 50,000. They were home to around 70% of the planets hedge funds (as of June 2012). The British Virgin Islands with a population of some 22,000 people just happens to be home to some 823,502 registered companies.
General Electric who paid no tax in 2010, made a $14.2 billion dollar profit. Barclay's had 181 subsidiaries (as of June 2012) registered in the Cayman Islands and paid little UK tax on its worldwide profits. News Corp managed to base 152 subsidiaries in tax havens across the planet (according to the US Government) and yet managed to pay no UK corporation tax between 1998 and 1999.
Former US President Obama was 100% right to suggest that the governments of the world should jointly tackle the issue of tax evasion and tax havens. By tackling the tax havens, the tax avoidance and the questionable dealings of the derivative traders, hedge funds and the off balance sheet trading then we might go so way towards dealing with the consequences of the worldwide financial crash.
The UK Government is in up to its neck in it when it comes to tax evasion; it’s heavily involved in aiding and abetting tax evasion worldwide. Yet that nice Mr Cameron and the other 18 millionaires in the cabinet pretty much stalled when it comes to closing the tax loopholes.
The old scandal of HSBC’s Swiss accounts was but the tip of a large iceberg. The British Virgin island (BVI) has incorporated more than a million such offshore entities since it began marketing itself worldwide in the 1980s. Company owners' true identities are never revealed. Even the island's official financial regulators normally have no idea who is behind them.
The British Foreign Office depends on the BVI's company licensing revenue to subsidise this residual outpost of empire, while lawyers and accountants in the City of London benefit from a lucrative trade as intermediaries, claiming that the tax-free offshore companies provide legitimate privacy.
Back in November 2012 a National Audit Office report noted that HM Revenue and Customs (HMRC) was struggling to curb aggressive tax avoidance schemes that were costing the UK billions of pounds in lost tax. No doubt much to the embarrassment of the Con Dems, tax evasion and tax evaders and the hunt for their concealed cash is still a big issue in the USA.
In the UK you get the impression that various Westminster governments (and perhaps the Party formerly known as New Labour) hope that the issue of unpaid tax, will quietly go away. The US government has actively pursued tax evaders, both foreign and domestic, yet in the UK, Westminster Governments has reduced the number of staff in Revenue and Customs from around 100,000 to 65,000 and aims to further reduce the numbers to around 50,000 by 2015.
British Overseas territories, including the Cayman Islands, help to hide around trillions from pounds from the different nation’s tax authorities. Deep in the belly of the beast lies the City, which may explain Cameron’s reluctance to do anything about the problem as some of the city banks are hand in glove with drug dealers, dictators, rogue states and terrorists when it comes to money laundering and perhaps offers comfy lucrative seats on the board to former Westminster politicians.
Plaid Cymru will not compromise on its commitment to tackling tax evasion. Tax evasion, tax avoidance or fiscal consolidation has resulted in vast sums of money being squirrelled away. Plaid believes that taxes should be collected properly and invested in vital public services such as health and education. The Westminster based parties, perhaps seeking future post Westminster employment, may wish to appease the City bankers and their wealthy backers, but Plaid Cymru believes in putting Welsh communities first.