A banking industry under siege
Kitty Miv, Editor
04 July, 2013
Kitty's Kountry Rankings are below, with a description of how they are kompiled. This week, as every week, I give out three Encomiums to countries which have done Good Things, and award three Execrations for countries which according to my highly personal and partial views have done Bad Things.
Global Tax Weekly has been portraying Switzerland as a country under siege, or at least a banking industry under siege (they still make watches and cheese with holes in it quite successfully, as far as I know). But the enemies are not just without (everyone's enemy the European Union, the USA, sadly, and paper tiger the OECD) but also within, where the Government has been coming under sustained attack from what is presumably a socialist-inspired popular national suicide movement called the people's this or the people's that, which is only a whisker away from names like National People's Party. I won't go further with that for obvious reasons, but it's allowed to wonder about the word 'people,' which is OK on the face of it, but has been acquiring noticeable political overtones, usually with a socialist or communist tinge. It's still respectable in "The People versus John Doe," but "Enemy of the People" as during the French and Russian Revolutions is not so nice. Anyway, back to Switzerland, where a "people's initiative" (a legitimate constitutional mechanism) has rounded up the 100,000 signatures necessary to bring about a referendum against the "flat tax" mechanism which attracts wealthy foreigners to many Swiss cantons. It won't be for another two years, and you would hope that the sensible Swiss majority would outvote the "fair tax" brigades. Certainly the Government knows which side its bread is buttered, to the tune of more than a billion dollars last year.
"Nonsense on stilts" was what Jeremy Bentham called human rights, which is nowadays presumably a deeply unfashionable position to defend; but all he meant was that human rights are not some sort of inbuilt principle of nature – he was strongly in favor of individual legal rights (animal rights as well, amazingly, for his time) which have to be fought for, over and over again. So he would probably have been supportive of the Canadian Government's intent to strengthen the country's Taxpayer Bill of Rights. Or would he? This appears to be a non-statutory initiative of the Canada Revenue Agency, flanked by an Ombudsman structure. Bentham probably wouldn't have been in favor of such a contraption, as being an administrative invention, rather than a defensible common-law right established and burnished by precedent. Any administrative machine has as its first goal the retention and expansion of its own powers and privileges, and to suppose that it can be reined in by a set of fine words is delusional. When those words are strengthened, all that happens is that the machine develops a thicker and more cunning carapace: you'll never be able to see inside and no Ombudsman will ever be able to help you except in the case of a gross abuse of process. So this is just smoke and mirrors. Don't be fooled! At least it's white smoke.
As an example of what I mean, there is this week's case of the UK tax authority, HMRC, being forced to come out into the open by a High Court judge over its treatment of QROPS cases (it doesn't matter what QROPS stands for – it sounds like a kind of dinosaur, but actually it's a way for UK expatriates to clamber out of HMRC's antediluvian and oppressive pension annuity rules). The pensions adviser in the case complimented HMRC over its treatment of QROPS cases, but only because it has to work with HMRC on a daily basis and wouldn't dare to criticize them for fear of damaging its clients' interests (and yes there is a vast structure of tax-payer rights, appeals tribunals and ombudspeople in the UK). It took a judge to point out HMRC's obscurantism. HMRC now has until mid-July to clarify its rules, something which is not anywhere near being achieved by the hundreds of pages of guidance so far published.
Assistant Treasurer David Bradbury says that the Australian Taxation Office will release more of its tax return data into the public domain, but claims that taxpayers should not be unduly worried about their privacy. The releases will be made within the boundaries of existing taxpayer confidentiality rules, he says. "Of course, I realise that, from time to time, releasing more tax data may generate some short-term political noise," he admitted. This is on a par with "stuff happens." Just recently Bradbury said that the tax affairs of multinational corporations are to be made public in order to "discourage aggressive tax minimization practices by large corporate entities." We have had cause to notice Minister Bradbury unfavorably in this column before, and he is now definitely joining our rogues' gallery. Still, given the ousting of his political boss Julia Gillard last week and the oncoming general election, his time in the sun may be limited (winter down under at present, of course).
I don't know what I would do for this column without France, which continues to roll out a stream of anti-business measures as it hurtles towards an approaching collision with reality. This week it's the turn of the yachting sector: while virtually every other jurisdiction in the world has noticed that building, selling and operating yachts is a major growth industry which ought to be encouraged in every way possible, especially if you have a coast-line, France regards yachts much as Robespierre must have regarded upholstered carriages and is determined to eradicate them along with tax havens and second homes. The Isle of Man, which is all coast-line and hardly any land, has got it right, as has Gibraltar, with its new 700-yacht marina. Pretty soon now you'll be able to walk from Europe to Africa on a yacht-bridge. France at least has a friend in Italy, which is also carrying out an anti-yacht pogrom, with tax inspectors masquerading as whelk-sellers in fashionable yachting resorts like Sardinia (the same as policemen, you can always tell them by the shoes; the Agenzia d'Entrata can't afford Gucci pumps).
Now this is very unfair, but I am going to punish the Cayman Islands (don't get your hopes up, Chairman Baucus) for issuing the longest-winded content-free response to the G8's call for "action plans" for establishing transparency in beneficial ownership etc etc. And this wasn't an easy competition to win: country after country, and rock speck after rock speck, took to the rostrum to deliver interminable and unconscionably worthy diatribes. Like many of them, Cayman said it was already doing everything it should, but supported everyone else in any case. Why bother to say anything at all? The UK had to be up front, given Premier Cameron's support for the G8 initiative, and said it would install a beneficial ownership register; but I really have to wonder what this means – there is already a requirement to list shareholders on the public company register in the UK, although of course a shareholder can just be listed as, for example, Rich Woman (Cayman) 2012 Ltd. How can the UK force out the fact that Rich Woman (Cayman) Ltd is owned by the wife of the last mayor of Moscow (just illustrative, of course) if she lives in Switzerland and operates through a Liechtenstein trust? So it's another case of hot air, smoke and mirrors. Are there elections coming up anywhere? That's usually the explanation. As the only person in the world who doesn't have an offshore bank account, you don't have to feel very threatened.
Kitty's Encomiums and Execrations
Methodology: each week (this is the 59th) two or three countries are given encomiums and two or three are given execrations. Those are the entries below with descriptive links. In the following week, each encomium counts as + 1 for that country, and each execration counts as – 1, being added to that country's existing score. Over time, therefore, a ranking will build up for each country, and further countries will join the listing. Germany is on + 2, since in the second week it had an execration and in the first week it had an encomium, leaving it at neutral; then it had an execration in week four, thus dropping to – 1, and another one in week six, dropping to – 2; finally in week 13 it got something right, so it went back up to – 1; then in week 16 it gained a further star, so then it was in neutral territory until week 23 when it dropped back to minus one, but reverting to neutral territory in the following week, then dropping to minus one in week 50, and back up to plus one in week 51, then to plus two in week 52.
The rankings are intended to be a proxy for business friendliness; evidently they are highly partisan, but as time goes by they are becoming useful for decision-making. For any country in negative territory, you should think carefully before starting a business there.
Canada on the side of the taxpayer
Switzerland Government against the people
And Kitty's Execrations:
Australia's dumps privacy
Cayman Islands wordy
France sets sail for oblivion
« Go Back to Blogs