Brexit: Having Their Cake While Eating Yours

I wasn’t surprised by the Brexit referendum result. I was suspicious.

Brexit is the popular term for the prospective withdrawal of the United Kingdom (UK) from the European Union (EU).

In a referendum on 23 June 2016, 51.9% of the participating UK electorate (the turnout was 72.2% of the electorate) voted to leave the EU.

https://en.wikipedia.org/wiki/Brexit

This was primarily because I’m very suspicious of the changes made by Teflon Tony in 2001 to the laws governing postal voting.

The Representation of the People Act 1985 subsequently made provision for these extensions to the right to apply for an absent vote.

The proposals did not apply to Northern Ireland where there was already widespread concern, shared by the Government, at the extent and nature of electoral abuse, including the abuse of postal voting.

Further amendments were made to the rules governing absent voting in the Representation of the People Act 1989.

Since 2001, any elector has been entitled to request a postal vote (known as postal voting on demand) without giving a reason, apart from in Northern Ireland, where postal voting is available only if it would be unreasonable to expect a voter to go to a polling station on polling day as a result of employment, disability or education restrictions.

Prior to 2001, postal votes had been available since 1948 only to those unable to attend a polling station for reasons of ill health, employment or planned holiday away from home and to some electors living on small islands where they would need to cross water to reach their polling station.

Before 1985, holidays were not a sufficient reason, and the employment criterion allowed only some professions.

https://en.wikipedia.org/wiki/Postal_voting#United_Kingdom_2

My suspicions [and cynicism] increased significantly when Malevolent May rushed to invoke Article 50 after articulating a vacuous strategy consisting of one empty platitude.

On 29 March 2017, the British government invoked Article 50 of the Treaty on the European Union.

The UK is thus on course to leave the EU on 29 March 2019.

https://en.wikipedia.org/wiki/Brexit

Britain’s shock vote to leave the European Union in June propelled May to power and the former interior minister has been under pressure to offer more details on her plan for departure, beyond an often-repeated catchphrase that “Brexit means Brexit”.

May says to trigger EU divorce by end of March, sterling falls
Reuters – Elizabeth Piper and Guy Faulconbridge – 2 Oct 2016

http://www.reuters.com/article/us-britain-eu-may-article-idUSKCN12208C

The rush to invoke Article 50 means the United Kingdom will leave the European Union on 29 March 2019 i.e. just before the beginning of their financial year beginning 1 April 2019.

In the United Kingdom, the financial year runs from 1 April to 31 March for the purposes of government financial statements.

https://en.wikipedia.org/wiki/UK_tax_year#United_Kingdom

This manoeuvre means the United Kingdom will avoid implementing the European Union Anti Tax Avoidance Directive which aims to prevent companies exploiting “national mismatches to avoid taxation”.

The Anti Tax Avoidance Directive

On 28 January 2016 the Commission presented its proposal for an Anti-Tax Avoidance Directive as part of the Anti-Tax Avoidance Package.

On 20 June 2016 the Council adopted the Directive (EU) 2016/1164 laying down rules against tax avoidance practices that directly affect the functioning of the internal market.

In order to provide for a comprehensive framework of anti-abuse measures the Commission presented its proposal on 25th October 2016, to complement the existing rule on hybrid mismatches.

The rule on hybrid mismatches aims to prevent companies from exploiting national mismatches to avoid taxation.

https://ec.europa.eu/taxation_customs/business/company-tax/anti-tax-avoidance-package/anti-tax-avoidance-directive_en

Under the European treaties, direct taxation is the sole preserve of individual EU member states, subject to compliance with the treaties.

EU measures on taxation require the unanimous agreement of all member states
.
ECOFIN will adopt the directive once the European Parliament has given its formal opinion.

Member states then will be obliged to adopt the domestic legislation necessary to comply with the draft directive by 31 December 2019 (with an extension until 31 December 2021 for the reverse hybrids provisions).

Deloitte – International Tax – European Union Tax Alert – 24 February 2017
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-alert-european-union-24-february-2017.pdf

The European Union Anti Tax Avoidance Directive could be very expensive and very embarrassing for those individuals using “offshore” companies.

The Brexiters who put their money offshore
Some of the loudest voices in the debate – many of whom want the UK to be a tax haven – have their own offshore interests

Most have publicly defended their offshore interests.

The Paradise Papers offer new vignettes about them – and how they have benefited, legally, from the kind of practices that are now under more scrutiny than ever before…

The Guardian – Juliette Garside, Hilary Osborne and Ewen MacAskill – 9 Nov 2017
https://www.theguardian.com/news/2017/nov/09/brexiters-put-money-offshore-tax-haven

And it could be very expensive for multinationals wishing to “drive down their tax bill”.

The world’s largest company Apple, whose market cap is approaching $1 trillion, has found a new exotic location to shelter its money from tax authorities. As leaked documents reveal, Apple has docked in Jersey.

The revelation comes at a time when Apple faces a €13 billion ($13.9 billion) fine from the EU for receiving illegal tax benefits in Ireland. The American company hasn’t paid yet, missing the January 3 deadline. The European Commission, on behalf of the EU’s competition watchdog, has taken Ireland to court for failing to collect billions of euros from Apple.

Ireland’s tax system allowed Apple to funnel all its sales outside the United States, about 55 percent of its revenue, through Irish subsidiaries paying hardly any taxes.

Apple finds new offshore haven to stash its cash, avoiding billions in tax
RT.com – 7 Nov 2017

https://www.rt.com/business/409033-apple-jersey-tax-avoidance/

Jersey is ranked as a tax haven by many organisations with the Financial Secrecy Index ranking Jersey as 16th, one rank behind the United Kingdom as of 2015.

https://en.wikipedia.org/wiki/Jersey#Taxation

The tax battle between the oligarchs is heating up.

The European Commission is to investigate a scheme introduced by the British Government that can help multinationals drive down their tax bill.

The crackdown comes after the EU Commission announced earlier this year that it was taking Ireland to the European Court of Justice for failing to recover 13 billion euros (£11.5 billion) in tax from US tech giant Apple.

It also handed Amazon a bill of around 250 million euros (£221 million) in back taxes after stating that the firm’s sweetheart tax deal with Luxembourg broke state aid rules.

EU to probe British tax scheme – Jersey Evening Post – 26 Oct 2017
https://jerseyeveningpost.com/news/uk-news/2017/10/26/eu-to-probe-british-tax-scheme/

The EU is demanding Britain accept that Northern Ireland may need to remain inside the European customs union and single market after Brexit in order to avoid “a hard border on the island of Ireland”.

Financial Times – Alex Barker – 9Nov 2017
https://www.ft.com/content/9e11bdcc-c585-11e7-b2bb-322b2cb39656

The great and the good backing the Malevolent May government are confronting a Marie Antoinette Moment because they want to keep their “offshore” cake whilst eating the “onshore” cake produced by the British and European taxpayers.

Sadly, it’s becoming increasing evident the great and the good consider the British people and the British economy to be inconsequential collateral damage.

But, as Barnier says, the moment of true clarification is approaching, whence these amateurs will no longer be able to fake it. They are going to be hit squarely between the eyes with a dose of reality. It will have them gasping for breath.

In that context, in my piece yesterday, I advanced the idea that the UK could lose in the first year of Brexit close to £400 billion in GDP – a fall of around 20 percent.

By contrast, we see in City AM a report citing Oxford Economics which has a “no deal” Brexit wiping off £16 billion from the UK GDP by 2020.

That is actually less than one percent, although its actual report posits a worst case scenario of 3.9 percent loss of GDP.

That, in itself is substantial, a yearly accumulating loss of £75 billion.

In one year, that far exceeds the total of £60 billion we may have to pay to the EU for a “soft” exit.

Brexit: Fighting Talk – Eureferendum.com – Richard North – 10 Nov 2017
http://www.eureferendum.com/blogview.aspx?blogno=86664

I hope I’m wrong.

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4 Responses to Brexit: Having Their Cake While Eating Yours

  1. tom0mason says:

    Had to smile when you mentioned the Guardian. The Guardian is ultimately owned by Scott Trust Limited (https://en.wikipedia.org/wiki/Scott_Trust_Limited), a nominally charitable organization but is a private company with many of it’s assets off-shore (for tax reasons?).

    The Guardian and its parent groups participate in Project Syndicate, established by George Soros, and intervened in 1995 to save the Mail & Guardian in South Africa. However, Guardian Media Group has said that it sold the majority of its shares of the Mail & Guardian in 2002. There is no method to verify this as all these transactions were ‘private’.
    Also of note is that the Guardian has done a deal with New East Network. The New East Network, has connections to some NGO’s, some strange blogoshere sites(see https://off-guardian.org/2015/12/20/new-east-network-who-is-the-guardian-speaking-for-part-1/ ), and an entity called Eurasianet (http://www.eurasianet.org/ ). The managing editor of Eurasianet is Justin Burke. At the time that the Guardian made the announcement of its new partnership, Justin Burke was and still is the chief editor. A link to Eurasianet had Burke’s email address listed at Soros’ Open Society Foundation (https://www.theguardian.com/world/2014/jun/09/post-soviet-states-new-east-network-guardian-welcome).

    All money and influence peddling in MSM — The Guardian is no different.

  2. cadxx says:

    Tax Avoidance
    The redistribution of wealth is a subject neglected by politicians and the world and his wife since the 1940’s. I was watching some lady politician on TV blaming the “ageing population”. She said that in the forties there were four or five people working for every one out of work and compared the situation today as a cop-out for the complete failure of redistribution policies. The reality is that the same money (and more) is being made by companies who, thanks to automation, have a smaller workforce who collectively are paying less tax. (machines don’t pay tax) The failure is down to the politicians, but the Tories are not going to touch this one with a barge-pole.
    There are a small number of European politicians suggesting a “universal payment”, which is putting the problem on its head – the market needs to pay for it.
    Finally, there is the, beloved by the Tories, *stigmatisation* of the sick, the infirm, the old and those out of work for no fault of their own. This has to stop and it has to be admitted that payment to those on the social scrap-heap is not payment of the lazy, but a necessary social engineering project.
    cadxx

  3. johnm33 says:

    Bit of a tangent, but if society took back the ability to create money from the aristocrats then a simple 1-2% transaction tax on commerce would cover almost all government spending. Presently 40% of tax revenues go to pay the interest on government debt, [US + UK] and upstream of every consumer transaction there are interest charges of a similar magnitude. Money is created out of thin air by banks, in exchange for a security, mortgage, gov.bond, signed loan agreement etc., and hardly ever leaves the confines of a banks books, simply moving from one account to another. No doubt that creating money as debt is a brilliant idea but it should simply be lent by the government to each citizen equally, we could start by dividing the national debt by the number of citizens and crediting the accounts of each citizen with a subsistence level wage/debt until that amount has been created.
    http://www.sciencedirect.com/science/article/pii/S1057521914001070
    https://www.sprottmoney.com/blog/the-one-bank-revisited-jeff-nielson.html
    https://ellenbrown.com/2012/11/08/its-the-interest-stupid-why-bankers-rule-the-world/

  4. cadxx says:

    Yes, it always goes back to the banks. But how do you suggest we get shot of them?
    cadxx

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