Layer 119 The Rich and the Super Rich

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Several years ago, returning from Italy via the south of France, I turned left at Monaco to go and see for myself the supposed delights of Monte Carlo, since they’d never been all that apparent from television.

It turned out to be pretty much as expected - a boring, depressing, ugly and sterile place with a harbour full of fabulous expensive boats and so-called ‘yachts’. It’s a tiny town made up almost entirely of tall blocks of flats, with a casino at its centre.

Last night there was an hour long documentary on television featuring Piers Morgan (good project Piers!) traipsing around and examining the people of Monte Carlo and the place itself. And what did we glean from this chipper little documentary?

Monaco is a depressing, dull, ugly place full of millionaires and billionaires, their latest squeezes, and their insanely expensive toys - Rolls, Ferraris, Lambos, Porches, Bentleys and utterly mind-blowingly expensive boats.

And why do they queue up to live there? Duh! - They pay no taxes! Say no more.

But several more interesting bits of info emerged.

* A one-bedroom flat with a crap outlook on to other blocks of flats will set you back a million and a half Euros.

* A four-bedroom flat with superb views of this very ugly town full of tall blocks of flats will set you back ten million Euros, six million of them being for the cost of the view, or ‘location’.

* Cross the border into France (where people do pay tax - though not if you’re a tax-avoiding billionaire presumably) and similar properties or houses with even better views plus access to gardens will cost one tenth as much.

* The ‘workers’ of Monaco can no longer afford to live there - they commute on a daily basis.

* The place is full of high-class hookers who go there specifically to snare a millionaire or even a billionaire - and are very successful in doing so, according to Mick Hucknall, who happened to be there for a concert.

Mick himself came across very well in his interview - saying, for instance, that he wouldn’t dream of becoming a tax exile, and he was proud to pay his taxes in Britain.

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Taxes in Britain

“This crisis must spur us to take on the tax avoiders”, said Vince Cable in the Guardian this week:

The evidence of systematic tax avoidance by rich individuals and UK-based companies strikes a particularly ugly note in these straitened times.

There is surely some basic justice in the proposition that companies should pay the government of their host country for the infrastructure and other tax-financed services they receive: education, health, transport systems, policing.

In the case of the UK-based global banks . . . to see these catastrophically mismanaged institutions going cap in hand to the government while simultaneously organising tax avoidance schemes at the expense of the UK taxpayers beggars belief. One of the important supplementary arguments for the government assuming direct control of the banks it has rescued is to bring such practices to an end.

There is only so much governments can do in isolation. Tax arbitrage involves playing off one state against another. Governments can limit that game by co-operating. The British government's dogmatic opposition to any EU tax harmonisation has inhibited sensible, practical initiatives like agreement on a common EU tax base (not harmonisation of rates but agreement to treat depreciation and other accounting conventions in a similar way). Britain has formed a bizarre alliance with Ireland and the Baltic states to block co-operation.

Tax havens are the big challenge for the UK, which has spawned a substantial number in its dependant territories. There has been limited progress in stopping the grosser abuses, such as money-laundering, but non-criminal tax-dodging continues apace.

There is now a mood in the Obama administration and the EU to crack down on havens through such measures as withholding taxes to prevent leakage outside the main jurisdictions. The UK has traditionally dragged its feet on measures to curb tax havens, on the basis that these helped the City of London to attract business. It is to be hoped that straitened fiscal circumstances and a less credulous approach to the City will now persuade the government to turn its guns on the tax havens and tax-avoidance industry.

Well said, Vincent.

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Obama and Salaries

The new President has decided that NO executives of banks applying for government assistance will in future be allowed to earn more than $500,000 per year. So there!

How come we’ve not thought of imposing such restrictions? Obama just makes our pathetic government look more pathetic by the day.

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Monbiot and Blears

Talking of which, Hazel Blears has the audacity to hit back at George Monbiot in today’s paper. Ha!
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