#68 10 years after​ the crash
#67 Land Value Tax
#69 The problem with GDP

n the August 2017 Taxcast: #10yearsafter the crash we ask – what will the next one look like? Can we avoid it? Also: Panama Papers fallout – another Prime Minister bites the dust, this time in Pakistan, the offshore law firm Mossack Fonseca has closed 39 of its 45 offices around the world, a UK court ruling spells the end for ‘employee benefit trusts’ being used by footballers to minimise their tax bills, and Bank Of England Governor has predicted Britain’s financial sector could double in size in the next 25 years. Has he not heard of the finance curse?

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Jargon
Finance Curse

The finance curse identifies a paradox at the heart of financial sectors. While it is common to think of a finance centre as the engine of an economy, an oversized financial centre can make a country poorer and destabilise economies, and actually delivers a range of harms. For instance, oversized finance boosts inequality, undermines democracy and people’s faith in the rule of law. It damages national security. It corrupts markets, makes businesses more fragile, less resistant to shocks, and harms good governance. It also has powerful geographical, racial and gender effects.

Secrecy Jurisdiction

A tax haven or secrecy jurisdiction is a place that deliberately provides an escape route for people or entities who live or operate elsewhere. They shield them from whatever taxes, criminal laws, financial regulations, transparency or other constraints they don’t like. Ordinary people whose lives are affected by tax haven laws are not consulted on these laws because they live in other countries: they have no say in how those laws are made, thus undermining their democratic rights.

Tax Haven

A tax haven or secrecy jurisdiction is a place that deliberately provides an escape route for people or entities who live or operate elsewhere. They shield them from whatever taxes, criminal laws, financial regulations, transparency or other constraints they don’t like. Ordinary people whose lives are affected by tax haven laws are not consulted on these laws because they live in other countries: they have no say in how those laws are made, thus undermining their democratic rights.

Offshore

A tax haven or secrecy jurisdiction is a place that deliberately provides an escape route for people or entities who live or operate elsewhere. They shield them from whatever taxes, criminal laws, financial regulations, transparency or other constraints they don’t like. Ordinary people whose lives are affected by tax haven laws are not consulted on these laws because they live in other countries: they have no say in how those laws are made, thus undermining their democratic rights.

Trusts

A trust is an arrangement that separates out ownership of an asset. Under a standard trust a person gives up an asset for the benefit of someone else (the beneficiary) under a set of rules (the trust deed.) These rules are enforced by a third person, the trustee. Trusts are used extensively in tax havens, whose laws provide secrecy which allows the original owner to pretend to have given away the asset while in reality still controlling it. This allows them to potentially escape the tax bill on its income, or hide links to money laundering or other criminal activity.

Offshore Trusts

A trust is an arrangement that separates out ownership of an asset. Under a standard trust a person gives up an asset for the benefit of someone else (the beneficiary) under a set of rules (the trust deed.) These rules are enforced by a third person, the trustee. Trusts are used extensively in tax havens, whose laws provide secrecy which allows the original owner to pretend to have given away the asset while in reality still controlling it. This allows them to potentially escape the tax bill on its income, or hide links to money laundering or other criminal activity.

5 Rs of Tax

Revenue, to fund public services, infrastructure and administration.
Redistribution, to curb inequalities between individuals and between groups.
Repricing, to limit public “bads” such as tobacco consumption and carbon emissions.
Representation, to build healthier democratic processes, recognising that higher reliance of government. spending on tax revenues is strongly linked to higher quality of governance and political representation.
Reparation, to redress the historical legacies of empire and ecological damage.

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