10 ms·

Tax haven in the heart of Britain (2011)

112 points by ljf 12y ago

bcRIPster 12y ago
For more background, these two videos are amazingly informative. The City of London Explained (pt 1 and 2) https://www.youtube.com/playlist?list=PLqs5ohhass_QScZFYoQX-7376-Zp654mH https://www.youtube.com/playlist?list=PLqs5ohhass_QScZFYoQX-...
- coppolaemilio 12y ago
  Thanks for the video, it was great :O
  - Dobbs 12y ago
    I highly recommend all of CGP's videos. They are all fun and very informative. I just started listening to his podcast "Hello Internet" which is also enjoyable.
- logicbox 12y ago
  +1
walshemj 12y ago
As a UK citizen I think sorting out the channel islands, IOM and the other tax havens in the EU is probably more useful. but of course that would upset powerful media owners according to one UK MP.
- justincormack 12y ago
  The Channel Islands and Isle of Man are not in the EU... thats one of the strangenesses. They should be forced to join.
  - dageshi 12y ago
    Might want to wait until after any potential referendum where we might leave...
  - gaius 12y ago
    It is the EU that is directly responsible for the "Dutch double sandwich" and various other tax dodging schemes. Lots of loopholes, we simply can't close, until we leave.
    - greenpinguin 12y ago
      The EU is the only hope we have to balance the power of the city. What can a government of only 60 million, where one house is not even democratically elected, do against the might of world's finance system?
      - Dobbs 12y ago
        I'm not sure what the fact that one house is not democratically elected has to do with anything? The point of an upper house is that it is supposed to be impartial to the whims of the voters. In the USA we originally had an appointed Senate and still to this day have an appointed Judicial system. Should supreme court judges be elected? I have to say as a quasi-outsider (English raised in the USA) that more often than not I'm extremely impressed by what comes out of the House of Lords. For example their recent statement on the EU's right to be forgotten.
        maaku 12y ago
        As an American ("no taxation without representation!") I've always... admired the House of Lords. They are able to say and do things which no elected politician can, and provide a sort of stabalizing feedback to the UK's parlimentarian system. Not unlike the relationship of the American congress with the appointed-judege court system. I was sad when I found out that the House of Lords is in the process of being reformed, with membership moving from peerage to either elected or elected-appointed positions. I fear that this won't end well for Britain :(
- greenpinguin 12y ago
  I remember reading a study that 60% of global black trading goes through the city. Why waste time at the periphery when the core is open for all to see? Also sorting out Crown dependencies is something only the UK can do not the EU.
  - walshemj 12y ago
    But its much easier to fix those edge cases like channel islands Andorra monte carlo etc all it would take is action by 2 or 3 states.
    - greenpinguin 12y ago
      It's not easier. They are independent nations, sort of at least. The problem is how does the money/wealth get into a tax haven in the first place? That's where the city comes in! You cannot just fly with millions in cash (still happens too) you need a way to move money there smartly to bypass the FCA & Co. Once the money has left EU jurisdiction it's too late!
      - walshemj 12y ago
        All those tax havens have effectively sponsoring major eu nations to be able to function. Just get France Spain Germany and UK to present them with an offer they can't refuse. Behave or you will end up like north Cyprus
        _delirium 12y ago
        France did that with Monaco in 1963: Charles DeGaulle blockaded the city until they signed a tax treaty. It didn't eliminate Monaco's tax-haven status, but did limit it in various ways, especially as regards French citizens and companies.
- phaemon 12y ago
  It would also upset the City of London, and therefore won't happen. As a UK citizen, you should realise how entangled they are.
valarauca1 12y ago
TL;DR "The City of London" is an ancient city founded by the Romans who's been continuously governed by an embarrassingly complicated government that nearly puts the Catholic Church to shame, and is nearly as old. It to this day involves guilds. The short version is that companies get the right to vote in this system. And do the high price properties are nearly the entire government. This leads to an incredibly business friendly government.
- jbuzbee 12y ago
  Oh yeah. See their recent abuses of perceived power to shut down web sites they (or their supporters) don't like: https://www.techdirt.com/blog/?tag=city+of+london+police https://www.techdirt.com/blog/?tag=city+of+london+police
adwf 12y ago
Seems to be a lot of complaining about the City of London's semi-autonomous status, without actually explaining why this is a bad thing. I've always thought it was just an odd historical quirk. They're still subject to the general laws of the country, still subject to the same taxes and regulations. The articles main complaint seems to be about banks and other financial bodies using offshore tax havens, but that has nothing to do with the City's odd status. That could happen - and does happen - anywhere in the world...
- toyg 12y ago
  > They're still subject to the general laws of the country, still subject to the same taxes and regulations. The point of the article is that this is actually not true; the City is not subject to Parliament and Monarch, but rather a peer with substantial autonomy on various matters, enjoying special representation at Westminster and in other bodies. The author mentions a private development where the City was at the same time investor and institutional overseer, in a clear conflict of interest that would be illegal elsewhere in the UK. Because the City body politic is composed by businesses rather than individuals, most matters where special status is invoked or leveraged are financial privileges and lobbying powers of one sort or another; this enabled City companies to build the network of tax havens we all know and love, where money flows to semi-autonomous City of London, which redirects it to progressively-more-autonomous dominions oversea, disappearing like a ship on the horizon. Removing all privileges the City enjoys would be a necessary first step to crack down on global tax avoidance in the financial sector, but this is extremely unlikely: Blair's (New) Labour held an overwhelming parliamentary majority for a decade and still conceded to the City's wishes, while Tories are wholly dependent on City money to even exist in the first place. The author believes international pressure will eventually force the government's hand at some point; personally, I am quite skeptical -- but then again, I work with/for a lot of City companies, so I might not be entirely unbiased.
  - adwf 12y ago
    The only taxes I can see them being exempt from are local council taxes, not income/VAT/corporation tax. And whilst they are nominally not subject to the Monarchy, nor is the rest of the country really. Much like the Monarchy, the City's regulatory power is largely paper thin and only exists within the square mile. The moment they tried to exercise any kind of open egregious use of power (like evading, rather than avoiding corporation tax), they'd find their priviledges revoked near-instantly. However that doesn't prevent them from using the usual methods of bribery and corruption from influencing the government. But then how is that any different from any country in the world?
phaemon 12y ago
The City of London Corporation is the number one reason to vote Yes for Scottish independence. The concept of the Remembrancer should be utterly repugnant to anyone who believes in democracy over facism. Edit: And I'll note that this was voted down before I even had a chance to fix my spelling! Guess the money spent on "social media consultants" was worthwhile guys, huh?
- phaemon 12y ago
  Oh, and I'm going to be mentioning the Corporation a lot over the next month, in letters to the local press and messages online. The downvotes have motivated me :)
stuaxo 12y ago
They are the last of the rotten boroughs. They should be merged with tower hamlets next door, which has a very high poverty rate. They are not voted in by the people, but the various guilds within their boundries.

112 points by ljf 12y ago

For more background, these two videos are amazingly informative. The City of London Explained (pt 1 and 2) https://www.youtube.com/playlist?list=PLqs5ohhass_QScZFYoQX-7376-Zp654mH https://www.youtube.com/playlist?list=PLqs5ohhass_QScZFYoQX-...

coppolaemilio 12y ago
Thanks for the video, it was great :O
- Dobbs 12y ago
  I highly recommend all of CGP's videos. They are all fun and very informative. I just started listening to his podcast "Hello Internet" which is also enjoyable.
logicbox 12y ago
+1

walshemj 12y ago

As a UK citizen I think sorting out the channel islands, IOM and the other tax havens in the EU is probably more useful. but of course that would upset powerful media owners according to one UK MP.

justincormack 12y ago
The Channel Islands and Isle of Man are not in the EU... thats one of the strangenesses. They should be forced to join.
- dageshi 12y ago
  Might want to wait until after any potential referendum where we might leave...
- gaius 12y ago
  It is the EU that is directly responsible for the "Dutch double sandwich" and various other tax dodging schemes. Lots of loopholes, we simply can't close, until we leave.
  - greenpinguin 12y ago
    The EU is the only hope we have to balance the power of the city. What can a government of only 60 million, where one house is not even democratically elected, do against the might of world's finance system?
    - Dobbs 12y ago
      I'm not sure what the fact that one house is not democratically elected has to do with anything? The point of an upper house is that it is supposed to be impartial to the whims of the voters. In the USA we originally had an appointed Senate and still to this day have an appointed Judicial system. Should supreme court judges be elected? I have to say as a quasi-outsider (English raised in the USA) that more often than not I'm extremely impressed by what comes out of the House of Lords. For example their recent statement on the EU's right to be forgotten.
      - maaku 12y ago
        As an American ("no taxation without representation!") I've always... admired the House of Lords. They are able to say and do things which no elected politician can, and provide a sort of stabalizing feedback to the UK's parlimentarian system. Not unlike the relationship of the American congress with the appointed-judege court system. I was sad when I found out that the House of Lords is in the process of being reformed, with membership moving from peerage to either elected or elected-appointed positions. I fear that this won't end well for Britain :(
greenpinguin 12y ago
I remember reading a study that 60% of global black trading goes through the city. Why waste time at the periphery when the core is open for all to see? Also sorting out Crown dependencies is something only the UK can do not the EU.
- walshemj 12y ago
  But its much easier to fix those edge cases like channel islands Andorra monte carlo etc all it would take is action by 2 or 3 states.
  - greenpinguin 12y ago
    It's not easier. They are independent nations, sort of at least. The problem is how does the money/wealth get into a tax haven in the first place? That's where the city comes in! You cannot just fly with millions in cash (still happens too) you need a way to move money there smartly to bypass the FCA & Co. Once the money has left EU jurisdiction it's too late!
    - walshemj 12y ago
      All those tax havens have effectively sponsoring major eu nations to be able to function. Just get France Spain Germany and UK to present them with an offer they can't refuse. Behave or you will end up like north Cyprus
      - _delirium 12y ago
        France did that with Monaco in 1963: Charles DeGaulle blockaded the city until they signed a tax treaty. It didn't eliminate Monaco's tax-haven status, but did limit it in various ways, especially as regards French citizens and companies.
phaemon 12y ago
It would also upset the City of London, and therefore won't happen. As a UK citizen, you should realise how entangled they are.

valarauca1 12y ago

TL;DR "The City of London" is an ancient city founded by the Romans who's been continuously governed by an embarrassingly complicated government that nearly puts the Catholic Church to shame, and is nearly as old. It to this day involves guilds. The short version is that companies get the right to vote in this system. And do the high price properties are nearly the entire government. This leads to an incredibly business friendly government.

jbuzbee 12y ago
Oh yeah. See their recent abuses of perceived power to shut down web sites they (or their supporters) don't like: https://www.techdirt.com/blog/?tag=city+of+london+police https://www.techdirt.com/blog/?tag=city+of+london+police

adwf 12y ago

Seems to be a lot of complaining about the City of London's semi-autonomous status, without actually explaining why this is a bad thing. I've always thought it was just an odd historical quirk. They're still subject to the general laws of the country, still subject to the same taxes and regulations. The articles main complaint seems to be about banks and other financial bodies using offshore tax havens, but that has nothing to do with the City's odd status. That could happen - and does happen - anywhere in the world...

toyg 12y ago
> They're still subject to the general laws of the country, still subject to the same taxes and regulations. The point of the article is that this is actually not true; the City is not subject to Parliament and Monarch, but rather a peer with substantial autonomy on various matters, enjoying special representation at Westminster and in other bodies. The author mentions a private development where the City was at the same time investor and institutional overseer, in a clear conflict of interest that would be illegal elsewhere in the UK. Because the City body politic is composed by businesses rather than individuals, most matters where special status is invoked or leveraged are financial privileges and lobbying powers of one sort or another; this enabled City companies to build the network of tax havens we all know and love, where money flows to semi-autonomous City of London, which redirects it to progressively-more-autonomous dominions oversea, disappearing like a ship on the horizon. Removing all privileges the City enjoys would be a necessary first step to crack down on global tax avoidance in the financial sector, but this is extremely unlikely: Blair's (New) Labour held an overwhelming parliamentary majority for a decade and still conceded to the City's wishes, while Tories are wholly dependent on City money to even exist in the first place. The author believes international pressure will eventually force the government's hand at some point; personally, I am quite skeptical -- but then again, I work with/for a lot of City companies, so I might not be entirely unbiased.
- adwf 12y ago
  The only taxes I can see them being exempt from are local council taxes, not income/VAT/corporation tax. And whilst they are nominally not subject to the Monarchy, nor is the rest of the country really. Much like the Monarchy, the City's regulatory power is largely paper thin and only exists within the square mile. The moment they tried to exercise any kind of open egregious use of power (like evading, rather than avoiding corporation tax), they'd find their priviledges revoked near-instantly. However that doesn't prevent them from using the usual methods of bribery and corruption from influencing the government. But then how is that any different from any country in the world?

phaemon 12y ago

The City of London Corporation is the number one reason to vote Yes for Scottish independence. The concept of the Remembrancer should be utterly repugnant to anyone who believes in democracy over facism. Edit: And I'll note that this was voted down before I even had a chance to fix my spelling! Guess the money spent on "social media consultants" was worthwhile guys, huh?

phaemon 12y ago
Oh, and I'm going to be mentioning the Corporation a lot over the next month, in letters to the local press and messages online. The downvotes have motivated me :)

stuaxo 12y ago

They are the last of the rotten boroughs. They should be merged with tower hamlets next door, which has a very high poverty rate. They are not voted in by the people, but the various guilds within their boundries.