misbehaving in a tea party: review of UK Gold

If there is one good outcome of the 2008 financial crisis followed by cold-blooded austerity policies, then it is this increased attention to the massive tax avoidance, which has been taking place for years and years. This excellent documentary UK Gold (rent full movie here) is yet another contribution building greater awareness in society about the ugly side of the British wealth and the wealthy. It is about complete kleptocracy, clientelism and lack of democracy.

This film, firstly, disproves the myth that the most notorious tax havens like Cayman Islands, British Virgin Islands etc, are independent, autonomous from the British government. This argument of their autonomy from the UK government, which British government often uses to explain its in-action with respect to abolishment of tax havens, is farce. In reality all of these ‘independent’ territories have British governors appointed by the Queen (in addition to the locally elected governments) who enjoy power and influence over their internal policies and rules.

The facts are:

  • 1 in 4 UK companies pays no tax at all;
  • 25bn GBP a year UK is losing because of tax avoidance;
  • 360bn USD developing countries are losing as result of tax avoidance via tax havens (for comparison – annual international aid is about 120bn USD);
  • 98 out of top100 FTSE companies use tax havens;
  • Cayman Islands is the 4th largest financial centre in the world and has more money than NY;
  • Corporate tax avoidance has been constantly rising;

 So, with these facts on the table, one may wonder why then British government is so unwilling to get rid of tax havens? Why it tolerates this escape from responsibilities, undermining of democracy and theft of common purse?

Some of the explanations are:

  • Legislative process has been captured by multinational companies and influential lobbyist groups;
  • Government’s own links with tax havens or their own reliance on tax havens to maintain or improve their wealth (apparently Cameron’s inherited wealth was very much created through tax havens);
  • Over 60 MPs have relations with companies related to tax havens;
  • The City of London, the mother of all tax havens, is the top lobbyist in the UK, the oldest lobbyist in the world, and has a designated seat in the parliament;
  • Since mid 20th century international finance has been the key sector, which has preserved UK’s world power status. Without the City of London and its worldwide cobweb of tax havens and further plans of expansion and influence (the cityUK is behind the ambitious project of making Nairobi the international finance centre) UK would be a medium-size economy;
  • what will the firms like Maples (the leading international law firm advising financial, institutional and business clients around the world on the laws of the Cayman Islands, Ireland and the British Virgin Islands).do, once they wont be able to makes fortunes out of advisory services on ‘developing innovative and effective solutions’ on tax matters?

The last G20 and G8 summits indeed have expressed concerns about the negative impact of tax havens and have even called for concrete actions against them, however, in reality the hyperactive signing of cooperative agreements is far from sufficient to make a significant change. It’s like putting a plaster on an infected wound; nobody will be able to say that you have not done anything, but it will only hide the infection but bacteria will continue growing.

US and EU has been more progressive in addressing tax haven issues, but will they be strong enough to challenge the UK’s status quo?

One of the main narrators in this film, father William Taylor, who is extremely passionate about tax justice issues and wants to make politicians and companies accountable for this theft, ironically calls his own actions of speaking up and challenging the establishment as ‘farting at a tea party’ – you are just simply not supposed to talk about these tings! How dare you, but we should. We need more fathers William Taylor and more such noise-making films like the UK Gold.

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