Tax returns in Glasgow, 2009. Photo: Jeff J Mitchell/Getty Images
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Leader: The stench of corruption at HSBC is a reminder tax havens must be closed

Now we've caught wind of the money hidden in Swiss accounts, it's time to turn to other veiled tax affairs.

The tax scandal uncovered at HSBC is one that even the most imaginative conspiracy theorist would struggle to concoct. The Swiss arm of Europe’s largest bank is accused of having colluded with wealthy clients for years to allow them to shield undeclared accounts from their domestic authorities. Detailed information was passed to HMRC in 2010; 1,100 British citizens are thought to have been involved.

Five years later, just one prosecution has resulted. Contrast that with the 1,046,398 sanctions, or financial penalties, imposed on Jobseeker’s Allowance claimants in 2013, or the nearly 200,000 prosecutions of people who failed to buy a television licence. As the tax campaigner Richard Murphy put it: “To the wealthiest criminals and their assistants within the financial system go the rewards and the plaudits. To everyone else goes intimidation and persecution.”

Far from being called to account, Stephen Green, who served as chief executive and then chair of HSBC from 2006 to 2010, was ennobled by David Cameron and appointed as a trade minister in January 2011. He held the position until December 2013. An ordained priest and the author of Serving God? Serving Mammon?, Mr Green is now advising the Church of England on “talent management”.

Both the government and Mr Green must explain how all of the above occurred. But, like many of those on the HSBC list, their response has been one of evasion. “As a matter of principle, I will not comment on the business of HSBC, past or present,” the latter said. This stance is at odds with what he advocated in his book. “For companies, where does this responsibility begin?” he wrote. “With their boards, of course. There is no other task they have which is more important. It is their job ... to promote and nurture a culture of ethical and purposeful business throughout the organisation.” If the HSBC head did know about his bank’s behaviour, he was guilty of collusion. If he didn’t know, he was guilty of incompetence.

Ministers must explain why Mr Green was invited to join their ranks. That he may have been “an excellent trade minister”, as Mr Cameron put it, is irrelevant. The question, as in the case of his former director of communications Andy Coulson, is whether the Prime Minister was “wilfully blind” when he appointed Mr Green.

The laxity of HMRC’s approach to prosecutions suggests a refusal to reckon with the scale of the scandal. Margaret Hodge, the Labour chair of the Commons public accounts committee, observed: “If this had been benefits scroungers, they would have been queuing around the courtrooms.”

Unlike in the US, France, Belgium, Spain and Argentina, where legal proceedings have been launched against HSBC, no action has been taken against the bank by the UK. HMRC asserts: “In most cases, disclosure and civil fines are the most appropriate and effective intervention.” Yet to date just £135m has been recovered, less than France, though British citizens hold twice as much money. When governments fail to pursue those who evade tax, they squander their legitimacy with the great majority who pay it. As long as the penalties for this crime remain negligible, the incentives for others to behave in this way will endure. The feeling will grow, too, that the system is rigged against the honest citizen.

Ed Miliband, to his credit, understands this. Two days before the HSBC exposé, he announced that he had written to the offshore financial centres linked to Britain as Crown dependencies or overseas territories to say that under a Labour government they would have six months to open their books or be placed on a blacklist. The angry responses emanating from Bermuda, Jersey and elsewhere were as predictable as those of the business leaders who have recently warned of doom should Labour win power. They were equally wrong-headed. Tax havens denying that their affairs remain “shrouded in darkness”, as Mr Miliband described it, makes little sense when they still have no publicly accessible registers of beneficial ownership – documents that show who owns an offshore company.

As a result, HMRC cannot check if a UK resident has set up a company in these havens, let alone whether money is being diverted there. Such secrecy encourages tax avoidance and evasion and costs the Treasury billions of pounds in lost revenue. It needs to change – and soon.

 

This article first appeared in the 13 February 2015 issue of the New Statesman, Assad vs Isis

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Air pollution: 5 steps to vanquishing an invisible killer

A new report looks at the economics of air pollution. 

110, 150, 520... These chilling statistics are the number of deaths attributable to particulate air pollution for the cities of Southampton, Nottingham and Birmingham in 2010 respectively. Or how about 40,000 - that is the total number of UK deaths per year that are attributable the combined effects of particulate matter (PM2.5) and Nitrogen Oxides (NOx).

This situation sucks, to say the very least. But while there are no dramatic images to stir up action, these deaths are preventable and we know their cause. Road traffic is the worst culprit. Traffic is responsible for 80 per cent of NOx on high pollution roads, with diesel engines contributing the bulk of the problem.

Now a new report by ResPublica has compiled a list of ways that city councils around the UK can help. The report argues that: “The onus is on cities to create plans that can meet the health and economic challenge within a short time-frame, and identify what they need from national government to do so.”

This is a diplomatic way of saying that current government action on the subject does not go far enough – and that cities must help prod them into gear. That includes poking holes in the government’s proposed plans for new “Clean Air Zones”.

Here are just five of the ways the report suggests letting the light in and the pollution out:

1. Clean up the draft Clean Air Zones framework

Last October, the government set out its draft plans for new Clean Air Zones in the UK’s five most polluted cities, Birmingham, Derby, Leeds, Nottingham and Southampton (excluding London - where other plans are afoot). These zones will charge “polluting” vehicles to enter and can be implemented with varying levels of intensity, with three options that include cars and one that does not.

But the report argues that there is still too much potential for polluters to play dirty with the rules. Car-charging zones must be mandatory for all cities that breach the current EU standards, the report argues (not just the suggested five). Otherwise national operators who own fleets of vehicles could simply relocate outdated buses or taxis to places where they don’t have to pay.  

Different vehicles should fall under the same rules, the report added. Otherwise, taking your car rather than the bus could suddenly seem like the cost-saving option.

2. Vouchers to vouch-safe the project’s success

The government is exploring a scrappage scheme for diesel cars, to help get the worst and oldest polluting vehicles off the road. But as the report points out, blanket scrappage could simply put a whole load of new fossil-fuel cars on the road.

Instead, ResPublica suggests using the revenue from the Clean Air Zone charges, plus hiked vehicle registration fees, to create “Pollution Reduction Vouchers”.

Low-income households with older cars, that would be liable to charging, could then use the vouchers to help secure alternative transport, buy a new and compliant car, or retrofit their existing vehicle with new technology.

3. Extend Vehicle Excise Duty

Vehicle Excise Duty is currently only tiered by how much CO2 pollution a car creates for the first year. After that it becomes a flat rate for all cars under £40,000. The report suggests changing this so that the most polluting vehicles for CO2, NOx and PM2.5 continue to pay higher rates throughout their life span.

For ClientEarth CEO James Thornton, changes to vehicle excise duty are key to moving people onto cleaner modes of transport: “We need a network of clean air zones to keep the most polluting diesel vehicles from the most polluted parts of our towns and cities and incentives such as a targeted scrappage scheme and changes to vehicle excise duty to move people onto cleaner modes of transport.”

4. Repurposed car parks

You would think city bosses would want less cars in the centre of town. But while less cars is good news for oxygen-breathers, it is bad news for city budgets reliant on parking charges. But using car parks to tap into new revenue from property development and joint ventures could help cities reverse this thinking.

5. Prioritise public awareness

Charge zones can be understandably unpopular. In 2008, a referendum in Manchester defeated the idea of congestion charging. So a big effort is needed to raise public awareness of the health crisis our roads have caused. Metro mayors should outline pollution plans in their manifestos, the report suggests. And cities can take advantage of their existing assets. For example in London there are plans to use electronics in the Underground to update travellers on the air pollution levels.

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Change is already in the air. Southampton has used money from the Local Sustainable Travel Fund to run a successful messaging campaign. And in 2011 Nottingham City Council became the first city to implement a Workplace Parking levy – a scheme which has raised £35.3m to help extend its tram system, upgrade the station and purchase electric buses.

But many more “air necessities” are needed before we can forget about pollution’s worry and its strife.  

 

India Bourke is an environment writer and editorial assistant at the New Statesman.