Why Britain's biggest businesses are addicted to tax havens

The government is making it easier for multinationals to dodge taxes in developing countries.

What's a billion pounds to the government these days? Well, it's the amount that George Osborne spent slashing corporation tax from 28 per cent to 25 per cent over two years. But fewer people seem to have noticed that plans put out for consultation by the Treasury recently will give another £840m specifically to British multinational companies who use tax havens. Unmentioned in the government's consultation document is that these reforms will also make it much easier for British multinationals to use tax havens to dodge taxes in developing countries.

Research published by ActionAid today shows just how big this giveaway is likely to be. For the first time, we've been able to show the massive extent of tax haven use throughout the FTSE 100. 98 of the companies are using tax havens, where you'll find a whopping 38 per cent of all of their overseas companies located.

Our high street banks are the heaviest users with 1,649 tax haven companies shared between Barclays, HSBC, RBS and Lloyds. Barclays has 174 companies registered in the Cayman Islands alone.

Our research also raises real questions about the impact on developing countries, which lose three times more to tax havens than they receive in aid each year. The biggest ten tax haven users have a total of 3833 companies between them in tax havens (see chart), but they also have 1951 companies in developing countries. If we want these countries to become independent of development aid, as well as to end poverty, they need much more tax revenue to pay for public services.

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This all seems a little inconsistent. First, there is Britain's commitment as part of the G20 (albeit under the Brown government) to "take action against non-cooperative jurisdictions, including tax havens. We stand ready to deploy sanctions to protect our public finances and financial systems." Tax havens will be on the agenda again at the G20 summit in Cannes next month, and it's unlikely that Presidents Sarkozy or Obama, both facing election next year, will be keen to give up the fight they championed in 2009.

Second, there's the current government's commitments: Vince Cable has said that "much of the shadow banking sector, a major contributor to the economic crisis, was only possible because of tax haven secrecy," while George Osborne has promised to "target tax evasion and off-shore tax havens.Everyone must pay their fair share."

Third, there's the government's development agenda. David Cameron made "effective tax systems" a part of his vision for Africa earlier this year, and International Development Secretary Andrew Mitchell told an audience of campaigners that "everyone should pay their taxes due...we champion transparency."

The government's coalition agreement commits to "deliver value for money for British taxpayers and to maximise the impact of our aid budget," and "make every effort to tackle tax avoidance." So our new research not only raises big questions for the FTSE100, it also demonstrates the need for more coherence in government policy. Making it easier for British multinationals to dodge taxes in developing countries is a false economy for British taxpayers, because it takes money away from the very same governments that we are supporting through our overseas aid.

Asha Tharoor is the senior media officer of ActionAid.

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In defence of orientalism, the case against Twenty20, and why Ken should watch Son of Saul

My week, from Age Concern to anti-semitism.

Returning late from a party I never much wanted to go to, I leap up and down in the middle of the Harrow Road in the hope of flagging down a taxi, but the drivers don’t notice me. Either they’re haring down the fast lane or they’re too preoccupied cursing Uber to one another on their mobile phones. My father drove a black cab, so I have a deep loyalty to them. But there’s nothing like being left stranded in NW10 in the dead of night to make one reconsider one’s options. I just wish Uber wasn’t called Uber.

Just not cricket

Tired and irritable, I spend the next day watching sport on television – snooker, darts, cricket, anything I can find. But I won’t be following the Indian Premier League’s Twenty20 cricket again. It’s greedy, cynical, over-sponsored and naff. Whenever somebody hits a boundary, cheerleaders in cast-off gym kit previously worn by fourth-form Roedean girls wave tinsel mops.

Matches go to the final over where they’re decided in a thrashathon of sixes hit by mercenaries wielding bats as wide as shovels. Why, in that case, don’t both teams just play a final over each and dispense with the previous 19? I can’t wait for the elegant ennui of a five-day Test match.

Stop! Culture police!

I go to the Delacroix exhibition at the National Gallery to shake off the sensation of all-consuming kitsch. Immediately I realise I have always confused Delacroix with someone else but I can’t decide who. Maybe Jacques-Louis David. The show convincingly argues that Delacroix influenced every artist who came after him except Jeff Koons, who in that case must have been influenced by David. It’s turbulent, moody work, some of the best of it, again to my surprise, being religious painting with the religion taken out. Christ’s followers lamenting his death don’t appear to be expecting miracles. This is a man they loved, cruelly executed. The colours are the colours of insupportable grief.

I love the show but wish the curators hadn’t felt they must apologise for Delacroix finding the North Africans he painted “exotic”. Cultural studies jargon screams from the wall. You can hear the lecturer inveighing against the “appropriating colonial gaze” – John Berger and Edward Said taking all the fun out of marvelling at what’s foreign and desirable. I find myself wondering where they’d stand on the Roedean cheer-leaders of Mumbai.

Taking leave of the senses

My wife drags me to a play at Age Concern’s headquarters in Bloomsbury. When I see where she’s taking me I wonder if she plans to leave me there. The play is called Don’t Leave Me Now and is written by Brian Daniels. It is, to keep it simple, about the effects of dementia on the families and lovers of sufferers. I am not, in all honesty, expecting a good time. It is a reading only, the actors sitting in a long line like a board of examiners, and the audience hunched forward in the attitude of the professionally caring.  My wife is a therapist so this is her world.

Here, unlike in my study, an educated empathy prevails and no one is furious. I fear that art is going to get lost in good intention. But the play turns out to be subtly powerful, sympathetic and sharp, sad and funny; and hearing it read engages me as seeing it performed might not have done. Spared the spectacle of actors throwing their bodies around and singing about their dreams against a backdrop painted by a lesser, Les Mis version of Delacroix, you can concentrate on the words. And where dementia is the villain, words are priceless.

Mixing with the proles

In Bloomsbury again the next day for a bank holiday design and craft fair at Mary Ward House. I have a soft spot for craft fairs, having helped run a craft shop once, and I feel a kinship with the designers sitting bored behind their stalls, answering inane questions about kilns and receiving empty compliments. But it’s the venue that steals the show, a lovely Arts and Crafts house, founded in the 1890s by the novelist Mary Ward with the intention of enabling the wealthy and educated to live among the poor and introduce them to the consolations of beauty and knowledge. We’d call that patronising. We’re wrong. It’s a high ideal, to ease the burden of poverty and ignorance and, in Ward’s words, save us from “the darker, coarser temptations of our human road”.

An Oscar-winning argument for Zionism

Speaking of which, I am unable to empty my mind of Ken Livingstone and his apologists as I sit in the cinema and watch the just-released Academy Award-winning Son of Saul, a devastating film about one prisoner’s attempt to hold on to a vestige of humanity in a Nazi death camp. If you think you know of hell from Dante or Michelangelo, think again. The inferno bodied forth in Son of Saul is no theological apportioning of justice or deserts. It is the evisceration of meaning, the negation of every grand illusion about itself mankind has ever harboured. There has been a fashion, lately, to invoke Gaza as proof that the Holocaust is a lesson that Jews failed to learn – as though one cruelty drives out another, as though suffering is forfeit, and as though we, the observers, must choose between horrors.

I defy even Livingstone to watch this film, in which the Jews, once gassed, become “pieces” – Stücke – and not grasp the overwhelming case for a Jewish place of refuge. Zionism pre-dated the camps, and its fulfilment, if we can call it that, came too late for those millions reduced to the grey powder mountains the Sonderkommandos were tasked with sweeping away. It diminishes one’s sympathy for the Palestinian cause not a jot to recognise the arguments, in a world of dehumanising hate, for Zionism. Indeed, not to recognise those arguments is to embrace the moral insentience whose murderous consequence Son of Saul confronts with numbed horror. 

This article first appeared in the 05 May 2016 issue of the New Statesman, The longest hatred