Wednesday, February 9, 2011

Layer 440 . . . Policing the Protests, Egypt, Tax Laws, The City, Funding the Tories, and Treasure Islands

It's been pointed out to me that yesterday's posting was somewhat angry in tone. And here's me thinking how calm and moderate I'm remaining in the face of diabolical goings-on in the world!

On the radio this morning there have been reports of warnings by police spokesmen about the readiness of the police to respond to protests and demonstrations. Well, we all saw how the police responded in Egypt. Not very helpful, was it?

Warning over policing of protests

Police have been urged to adapt more quickly to the changing nature of protests in the UK.

"The service has a clear commitment to ensure peaceful protest can take place and balance the rights of everyone involved whether taking part in protest or going about their daily business."

On the other hand the response of the Egyptian army has been a model of how an army ought to respond to civil uprising. They're a presence on the streets, overseeing the peaceful demonstrations but not interfering with people's right to peacefully demonstrate. They are ready to respond to violence and destruction, but they are clearly neutral and not instigating or provoking any violence and fighting. They're certainly not seen to be taking sides with Mubarak and his cronies.


In response to yesterday's blog question about why people can't see what's happened to our materialistic, spiritually impoverished and corrupt society, I had this feedback -

"Why doesn't everyone get it?"

"Because there have been decades of indoctrination and many, including myself, have been brainwashed into believing there was only ONE way."

Ah yes - Thatcher's famous dictum - There Is No Alternative.

The issue of indoctrination and brainwashing brings me back to Naomi Klein's "The Shock Doctrine", and the fact that this book really MUST be read by everyone who wishes to call themselves educated, enlightened and aware. It's a work of pure genius for giving a comprehensive and comprehensible overview of the past decades of brainwashing and neo-imperialist indoctrination, privatisation, globalisation and colonisation.


Yesterday George Monbiot published another of his excellent columns in the Guardian:

To us, it's an obscure shift of tax law. To the City, it's the heist of the century

In David Cameron we have a leader whose job is to quietly legitimise a semi-criminal, money-laundering economy

'I would love to see tax reductions," David Cameron told the Sunday Telegraph at the weekend, "but when you're borrowing 11% of your GDP, it's not possible to make significant net tax cuts. It just isn't." Oh no? Then how come he's planning the biggest and crudest corporate tax cut in living memory?

If you've heard nothing of it, you're in good company. The obscure adjustments the government is planning to the tax acts of 1988 and 2009 have been missed by almost everyone – and are, anyway, almost impossible to understand without expert help. But as soon as you grasp the implications, you realise that a kind of corporate coup d'etat is taking place.

Like the dismantling of the NHS and the sale of public forests, no one voted for this measure, as it wasn't in the manifestos. While Cameron insists that he occupies the centre ground of British politics, that he shares our burdens and feels our pain, he has quietly been plotting with banks and businesses to engineer the greatest transfer of wealth from the poor and middle to the ultra-rich that this country has seen in a century.

Here's how it works.

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.

These measures will drain not only wealth but also jobs from the UK. The new legislation will create a powerful incentive to shift business out of this country and into nations with lower corporate tax rates. Any UK business that doesn't outsource its staff or funnel its earnings through a tax haven will find itself with an extra competitive disadvantage. The new rules also threaten to degrade the tax base everywhere, as companies with headquarters in other countries will demand similar measures from their own governments.

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.

I used to think of such processes as regulatory capture: government agencies being taken over by the companies they were supposed to restrain. But I've just read Nicholas Shaxson's Treasure Islands – perhaps the most important book published in the UK so far this year – and now I'm not so sure. Shaxson shows how the world's tax havens have not, as the OECD claims, been eliminated, but legitimised; how the City of London is itself a giant tax haven, which passes much of its business through its subsidiary havens in British dependencies, overseas territories and former colonies; how its operations mesh with and are often indistinguishable from the laundering of the proceeds of crime; and how the Corporation of the City of London in effect dictates to the government, while remaining exempt from democratic control. If Hosni Mubarak has passed his alleged $70bn through British banks, the Egyptians won't see a piastre of it.

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.

And this government? It has learned the lesson that Thatcher never grasped. If you want to turn this country into another Mexico, where the ruling elite wallows in unimaginable, state-facilitated wealth while the rest can go to hell, you don't declare war on society, you don't lambast single mothers or refuse to apologise for Bloody Sunday. You assuage, reassure, conciliate, emote. Then you shaft us.

• A fully referenced version of this article can be found on George Monbiot's website


Treasure Islands


"A brilliant expose of tax havens and tax avoidance.Quite topical with all these tory types not paying their fair share but be warned this book is bad for your blood pressure if you are one of the unfortunates who do pay your fair share in taxes. Its frightening how little the rich contribute to the countries they make their money from.Murdoch's companies pay about 6% tax in Britain,which shows what a parasite he is.Every honest tax payer should read this book."

"Shaxson has done everyone a huge favour by blowing away the fog that conceals the structures of our current financial system. Brilliant. - it won't be long before the opposition mobilises as this book is a devastating, relentless and compelling assault on self-interest. At last though we will have a worthy debate and hopefully some practical change."

"Shaxson's book unpicks a sinister entanglement of abuse and advantage over centuries spread throughout the globe and not just in the islands we vaguely understand to be "offshore" I will never visit the City of London again without the nauseated feeling that systems operate beyond the law, democracy and common decency to humiliate every britsh tax-payer but worse to take constant advantage of developing nations. The breadth of his research and interviewing is impressive. However the fear of libel emasculates the name-and-shame opportunities that would give this book the shock horror value, in personality terms, that it really should score from the systemic and metastatic cancer that he tries to excise. "

'Render therefore unto Caesar the things which are Caesars and unto God the things that are Gods' (Matthew 22:21) In the developed world, citizens are required to pay tax so that governments can provide hospitals, schools, roads, railways, police, social services, etc; etc. I believe that in a civilised country, income tax is the fairest way of re-distributing wealth, with the wealthiest paying the most tax and the poorest, the least. Society / Government has a moral duty to care for its' weakest members and spend money for the 'common good' Of course in America, with its' "frontier / survival of the fittest / winner takes all / free for all" mentality one can't expect civilised behaviour, and unfortunately, as this book reveals, they have spread their amoral ideas of how society should function, far and wide. Worldwide, the number of people using tax havens to hide and increase their wealth must be miniscule as a proportion of the global population, yet as this book demonstrates their malign influence affects us all - to our detriment.

"Nicholas Shaxon has written an excellent, well referenced , substantive book on how the money system works. Governments collude with financiers, and business interests, to make and take easy options for the benefit of the wealthy. The book is truly a revelation, and does much to explain how the sub prime crisis in the US morphed inexorably as institutions wrapped their packages in ever more complex instruments, built on an avalanche of cheap money. Shocking, un-putdownable, a brilliant piece of writing. Every Economics student should read this book. It should be mandatory for all Bankers and Financial Investment people to read and understand the immorality of their profession. "


Revealed: 50% of Tory funds come from City

Donations from the financial sector have risen steeply since David Cameron became leader of the Conservative party

Financiers in the City of London provided more than 50% of the funding for the Tories last year, new research revealed last night, prompting claims that the party is in thrall to the banks.

A study by the Bureau for Investigative Journalism has found that the City accounted for £11.4m of Tory funding – 50.79% of its total haul – in 2010, a general election year. This compared with £2.7m, or 25% of its funding, in 2005, when David Cameron became party leader.




William Hague reveals fears for Middle East peace process

Foreign secretary says uncertainty in Arab world could derail peace and urges Israel to tone down its 'belligerent' language

The foreign secretary, William Hague, has warned Israel against allowing the Middle East peace process to become a casualty of turmoil in the region, urging it to tone down "belligerent language" over protests in Egypt and other neighbouring states.

Speaking on a visit to the region, Hague told the BBC: "Amidst the opportunity for countries like Tunisia and Egypt, there is a legitimate fear that the Middle East peace process will lose further momentum and be put to one side, and will be a casualty of uncertainty in the region."

The foreign secretary implicitly criticised recent statements by the Israeli prime minister, Binyamin Netanyahu, in which he warned the country to prepare for "any outcome" and pledged to "reinforce the might of the state of Israel."

Hague told the Times: "This should not be a time for belligerent language. It's a time to inject greater urgency into the Middle East peace process."

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