The media is awash with news of the Paradise Papers, a leak of 13.4m files exposing measures taken by multinational corporations and wealthy individuals to minimise their tax liabilities. The Guardian article Paradise Papers leak reveals secrets of the world elite’s hidden wealth highlights the extent of the problem. For example, “Millions of pounds from the Queen’s private estate has been invested in a Cayman Islands fund – and some of her money went to a retailer accused of exploiting poor families and vulnerable people.” Another example exposes “A previously unknown $450m offshore trust that has sheltered the wealth of Lord Ashcroft.” Another highlights “Aggressive tax avoidance by multinational corporations, including Nike and Apple.” All of the examples in the article and the many more in the Paradise Papers expose one thing, the extent to which wealth insulates itself against taxation.
I think tax is the price you pay to live in a civilised society. If you want to do business in any country, you should pay your tax in that country. Tax pays for the infrastructure that allows you as a company or an individual to make a profit. If there is no tax income, there will be no schools educate your workforce, no roads to transport your goods, no healthcare for the consumers of your services. If you do not pay your fair share of tax you have no right to agency in society and no right to a profit.
The real problem exposed in the Paradise Papers is the low tax territories that allow the wealthiest to move their money into off-shore accounts or trusts or businesses. For me the only solution to this kind of behaviour is a single rate of tax, all over the world, no matter the territory you are in. The only way to stop wealth being moved to low tax territories is to remove low tax territories. I know this won’t happen. I have no faith that any world leader will do anything to curb these aggressive tax avoidance schemes. The political will just isn’t there. The vested interests are too powerful. But a single worldwide tax rate is the logical extension of the multinational business. If multinationals trade internationally why not make them pay an international tax rate. If rich individuals live internationally why not have them pay an international tax rate. That would close the loophole that allow low tax territories to exist in the first place. What’s the point of moving your money if there is no benefit to this slight of hand. Just a thought.
According to an article “Grenfell: names of wealthy empty-home owners in borough revealed” on The Guardian website there are 1,652 properties listed as unoccupied in Kensington and Chelsea. That is 1,652 properties that could be used, not as an investment, but as homes.
(This map shows London’s 20,000 empty homes: Time Out: May 10 2017)
It is estimated there are twenty thousand “ghost” homes across London. That is twenty thousand properties that could be a home to someone. That is an outrage.
There are many reasons for this. Not least because interest rates have been kept at ridiculously low levels since the 2008 crash. Those who have money have been buying property because it gives them a better return on their investment. (This nugget of information was given to me by the estate agent who sold the flat we rented; our landlord wanted to sell, so we had to find somewhere else to live.) Throw into this mix foreign nationals, encouraged to buy property as an investment by UK based estate agents, and you have a deepening crisis. Most people with average incomes, even above average incomes, are priced out of the market.
There are a couple of thing that could be done to stop this kind of hoarding. Interest rates could be increased so those with assets get a decent return on their money. This might force the price of property down so hoarding gives less of a return on an investment. If interest rates were put up, mortgage repayments would increase. Some of those who have benefited from low interest rates would not be able to afford their mortgage; a glut of property would be repossessed and released into the market, bringing prices down. This brings with it a whole level of misery I would not wish on anyone. I also don’t think it would have the desired outcome. I suspect the repossessed properties would be swallowed up by those with pockets deep enough to speculate.
The other strategy is more radicle and has the potential to solve the problem. The fist half of the strategy involves extending the rights of private tenants. We need to pass laws that give renters a right to long term leases. Not six or twelve months but five or ten years. People need that kind of stability in their lives. These long term leases also need to come with rent controls. The second half of the strategy is to force the owners of all property that sits empty to become landlords. Your property sits empty for more than six months; you have to rent it out, on a long term lease, at rent controlled prices. Investors will either sell their property because they don’t want to be landlords or the properties will be used as they were intended; as homes for people to live in.
I can just feel the vitriol coming my way from the vested interests. But the neoliberal market is broken and we need radicle solution. This is about as radical a way to home people as I can think of. Yes build more affordable homes but also put the stocks we have to better use.
I read something on The Canary about funding for Theresa May’s election campaign; The list of dodgy millionaire donors that Theresa May won’t want you to see. This prompted me to take a look on the Electoral Commission website. There you can search donations made to all the political parties.
Here is a list of donations made to all the political parties in the last month. DONATIONS
What strikes me is how much the Conservative party has been given. It is far more than any other political party, double what the Labour party has be give by their supporters. It is no surprise that the Labour party gets much of its funding from the unions. But the overwhelming impression I have from the list is that the wealthiest few donate thousands to the Conservative Party because the Conservative Party represent their interests.
So in the interests of the many, I donated to the Labour party. I would urge everyone reading this to do the same. We, the many, may not have much but if we stand together, donate a little, we can help the Labour party win this election. DONATE