Tax havens: Time to act by Richard Murphy

I note the use of the phrase "recognized tax havens", but can we ask who they are recognized by?

Most countries have some form of beneficial tax arrangementsl. Delaware in the USA is a great haven for companies with non-US income and the UK and Ireland are great havens for non-domiciled individuals.

It would be nice to see an impartial list of tax havens based on a clearly defined criterion as no doubt it will include the big countries as well as small ones.

I agree of course - as a shattered accountant! BUT

Please do a budget for this at £0 PSBR, and sadly I think you will see why we tax the serfs at 31% and companies at 28%. Paddy Ashdown said “(high) taxes are the price we pay to live in a civilized society”, which has an element of truth in it. I do agree however that government spending massively reducing is the route to lower taxes.

In the short term we should make it much harder to use tax havens, and see what we can do to increase the attractiveness of staying in uk e.g. small cos. CT at 20% up to £1m of profits would be a good start….

Hear hear Richard Downey. I wholeheartedly agree with your comments below.

In any organisation the buck stops with the man at the top. Never mind the regulators being asleep at the wheel (were they even in the car?) the buck stops with the man who set up this crazy system of regulation.

Our saviour, in fact the world's, Gordon.

It is no way the tax haven's fault at the mess this country is in.

Quite frankly it seems they haven't got a clue what they are doing and the UK taxpayer is going to pick the tab up for many years after he is retired probably to some cushy EU non job with rip off expense allowance etc as well as his credit crunch proof pension.

...as people realise that countries such as the UK which have been brought to its knees, not by the activities of a few small countries, but by the gross mis-management of the government, have non-trivial sovereign risk.

For the first time, I am setting up an offshore account and it's not in sterling.

People who bleat about offshore structure products really haven't done their research. Vehicles are set up offshore (including eg Luxembourg) to ensure tax transparency for international investors.

UK banks are and always have been subject to regulation on all their activities. The regulators have failed. People have borrowed more than they should encouraged by the government. This is not, in fact, the fault of the tax havens.

Part of the problem with the current economic crisis is not that banks are refusing to lend to each other; rather it is that banks are refusing or are reluctant to lend to businesses (small and large) and ordinary consumers. Why are they behaving like this? Cos they ain't got enough money, that's why.

The money that the US and UK governments have poured into their respective national banks has been swallowed up paying off (in part) the huge debts which they have incurred by lending on over-valued assets.

At the moment, the world's economy is like a giant jet airliner that has lost all engine power. It's in the process of gliding towards the ground. The passengers on it (us!) are naturally worried. The two co-pilots, a Mr Barack and a Mr Brown, are assuring the passengers that they are confident that they will be able to restart the plane's engines. 'We're pouring lots of fuel in,' they're telling us. Alas, it looks a certainty that the plane will crash. As with all plane crashes, it's going to be messy - very messy. You ain't seen nuffing yet. Stand by for the riots!

We have a system for resolving issues in this country. It's called democracy. It's not perfect (far from it), but it's better than the other systems on offer. The system whereby the wealthy can lean on countries to get their own way by using financial blackmail is particularly rubbish, imho.

Whilst tax havens exist , governments have an incentive to keep taxes below 'pips squeaking levels' as there is some competition.

As a shareholder of any business banks or otherwise I would be asking why are you NOT based in a tax haven as you are supposed to be maximising my returns.

The best way to 'deal' with tax-havens is to lower our obscene levels of tax and wasteful public spending, a flat tax of 15% would remove any incentive to move money or people overseas. The oligarchs you mention move their money oversea not because of tax which is low in Russia (they have a flat tax) but because they don't trust the government and fear it may confiscate their assets.

At the heart of the current economic crisis lies complexity. Basically nobody, including governments, regulators, investors, auditors, banks, management etc actually fully understood the risks and implications of the subprime debt, dodgy derivatives and off balance sheet goings on because of the sheer complexity involved. We see this time and time again whenever there is a crisis. You name it - Enron, Maxwell, Barings, the Lloyds spiral, wherever there is a scandal you will find complexity.

I personally think that globally we need to develop a framework of simplicity and transparency. In other words there would be a total ban on exotic derivatives, complex offshore structures and essentially any deal that is set up in a more complex way than the underlying commerciality justifies. Auditors should report on whether an entity is overly complex. Bring back Captain Mainwaring style of banking, where the bank lends responsibly to its customers and keeps the loan (and risk) on its own books - not flogged off to some unsuspecting punter, or hidden away in some special purpose vehicle.

In my own field of engineering, complexity = risk, and more complexity = more risk.

It is possible to approximately quantify the complexities involved (pace unknown unknowns etc...), and hence get an idea of the relative risk factors.

One just wonders why the credit-rating agencies awarding dodgy instruments a AAA rating did not use similar techniques - or did they not employ any engineers ?