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Since revelations have surfaced that billions of pounds sterling have left the UK for foreign tax havens there have been calls for people using foreign tax avoidance schemes to be ‘guilted’ into making a public apology.
Labour leader Jeremy Corbin suggests that anyone using an offshore tax haven should apologize to the country.
One British person who has millions invested in the Cayman Islands is the acting Queen of the United Kingdom. We don’t know if Jeremy Corbin wants Elizabeth Regina to apologize to the British public for investing overseas, and we assume he knows the Queen isn’t required to pay tax under British law, but does so voluntarily.
On a more serious note, the Labour leader is quite right to be appalled at those who, having been raised and who earned a good living in one of the best countries in the world, would then take their money out of the country that made them rich to invest it offshore!
Why would they do it? Because they can make higher returns on their investment (at higher risk) and it’s a way for companies to lower their overall tax burden, and individuals can hide money from family members.
Simple Solutions Work Best
Like taxing any British sterling that leaves the country at 20 percent. That way, HM tax office collects significant revenue and the government can better fund schools, hospitals and roads, etcetera.
Even so, some will choose to invest overseas because they can earn 50% returns or better in so-called ‘Frontier economies’ and even having paid such a (proposed) tax they’ll still earn 30% or better.
For each individual or business the first 100,000 pounds sterling taken out of the country shouldn’t be taxed, but everything after £100,000 individuals and companies should be required by law to pay the 20% tax.
By using this high-ish threshold, Mom, Dad and the kids can go holiday-making in foreign countries and not have to pay the foreign withdrawal tax, perhaps in their entire lifetime.
NOTE: For the first £100,000 worth of withdrawals it could go in Dad’s name, then Mom could use her lifetime 100,000 pounds foreign withdrawal limit. Therefore, a family unit would have a combined lifetime limit of £200,000. Once they hit that threshold, thereafter they would pay 20% tax on each pound that they send or spend outside the country.
On a Separate Note; 19 Billion of Them, Actually
Britain loses about £19 billion annually on so-called ‘Foreign Remittances’ on account of foreign-born workers sending their money home to their families. Who could blame them?
Yet it’s a serious problem, but as previous governments haven’t figured out a way to stop it, it’s never been addressed.
SIX PERCENT of Thailand’s GDP comes from foreign remittances, for just one example, and many other countries count foreign remittances as an important part of their GDP.
Therefore, expats should be able to send the first 100,000 pounds home without paying the 20% tax — but after that they’re draining the country of money(!) so they must begin to pay the tax when they hit the £100,000 mark.
The trick is to be fair with foreign workers who work hard to earn their money, but to stop the UK being unduly taken advantage-of which has been happening for decades.
The government relies on voluntary notifications of such foreign remittance sending, so the number is pegged at £3.2 billion pounds sterling on the GOV.UK website.
Money exchange units such as Western Union, PayPal, World Remit, and banks and trust companies know the real numbers, but interestingly, not one of them have ever been called to testify to the House of Commons about the gross total amounts transferred out of the UK annually. Not once…
It’s Either Treason Or it Isn’t. It Can’t be Both
With a 100,000 pound threshold, my tax idea isn’t aimed at *normal citizens* nor is it aimed at *normal expats* sending a few thousand pounds home to their families — it’s aimed at the fat cats, at the criminal syndicates, and at wealthy people who earned or inherited their fortunes in the UK who should be deeply ashamed they’re not re-investing in the country that made them rich.
To me, such people should have a fair trial on Friday and if they’re found guilty, let them be found guilty of treason (for that’s what it is, IMHO) and be shot dead on Monday — but that law isn’t likely to be passed in the UK House of Commons anytime soon.
It’s Been Going On for Decades; What to Do Now?
Perhaps we could say; ‘What’s gone on before now we can leave aside, as there weren’t sufficient laws nor guidance for individuals or companies, and frankly, in past decades the taxation rates were grievous to be borne by both individuals and companies’ — but at this late date we’re going to create new laws (that don’t need to be complicated!) to counter the astonishing, continuous, and increasing run on the country’s wealth.
Everything is Nothing – Unless You Can Accurately Quantify and Qualify It
Therefore, the UK government should call banking experts and wire transfer companies to testify (under oath) before the House of Commons as to the general extent of the foreign remittance problem and to quantify and qualify the offshore tax shelter monies that leave Britain annually for foreign tax havens.
How to Plug a Leak
The goal should be to compel banks and wire transfer companies to become ‘part of the solution instead of part of the problem’ as the government needs the information — the banks and transfer companies have it; the government doesn’t! — and nobody else on the planet could begin to figure it all out.
Getting a handle on this decades-long travesty (drum roll, please) could provide a double-boost to the UK economy by;
- preventing multi-billions of British sterling from leaving the country by making it uneconomical,
- and by capturing billions in tax revenue on money still determined to leave the country,
- and allowing the government to earn enough revenue to lower the corporate tax rate to 14.5% (to match Canada and other competitive nations’ corporate tax rate)
- which would drive investment to the UK in the billions, and perhaps a trillion pounds over 10 years.
See what plugging a leak can do for the United Kingdom?
by John Brian Shannon | November 29, 2016
Some things are expected, and some things sure aren’t. And one of the things that wasn’t expected even by the most vociferous Brexiteers prior to the June 23 referendum, was the strength of the UK economy.
In the run-up to the referendum, Bremainers used the fear of an economic crash in the UK to good effect, lowering support for Brexit from a high of almost 70% down to 52% in the final two weeks of the campaign.
Even so, Britons ‘knowing’ in their hearts there would be high economic costs to exit the EU (because famous Op/Ed journalists told them so) they still voted for more democracy, more sovereignty, and more control over immigration
The latest OECD report, informs us that GDP growth in the UK next year will be a healthy 2% — beating major Western and developing nation economies, and the following year is estimated to be in the 1.5% range. Not bad, considering the doom that was supposed to be upon us and considering that the OECD itself had earlier predicted UK growth to be at 1.5% and 1.2% (at best) over the same two-year period.
Sure, some things need to be carefully navigated. Raising the minimum wage for UK workers over age 25 (called The National Living Wage) could be an additional cost for some employers and could thereby increase the unemployment rate among workers. But it’s an overstatement to say that could happen in a growing economy however, if the economy begins to contract it becomes incrementally more serious.
Something else that bears watching is the fall in the value of the pound — which is seen as a desirable thing by economists as it increases exports in almost every country where currency devaluation has ever occurred — but if it doesn’t happen, a speedy remedy must be found. A falling currency with no appreciable increase in exports has no value at all, and only serves to make foreign goods and foreign travel for Britons, more expensive. Government intervention must therefore be instant and right on target in order to rectify the problem.
The UK economy is largely service based (due to the historical high valuation of the British pound) and with a falling pound manufacturing exports should rise in tandem with the falling currency (with plenty of lag time, as it isn’t an instant process) yet if it carries on for too many months, government must intervene to help exporters.
Help is not ‘help’ unless it is actually help.
Providing the right kind of assistance to British manufacturers is key here. There’s no use having the international trade office providing help to access foreign markets if transportation bottlenecks are the problem! Likewise, if limited access to rare-earth metals is the thing restricting manufacturers, lowering the corporate tax rate won’t help.
It’s about listening carefully to the needs of exporters
It’s about meeting every manufacturing CEO and giving them a full and fair hearing in regards to their corporate needs. And then, solving the problems surrounding their inability to export in huge volumes.
It’s doubtful that a one-size-fits-all solution is going to work in Britain’s case. It’s likely that a range of issues need to be addressed. Certainly, companies have a different challenges. For example, some have never exported railway steel (due to the historically high pound) while others that export designer clothing (the high pound just isn’t a factor in this particular market) but face competition from nations which allow ‘knock-offs’ of Britain’s famous clothing brands.
In previous decades, governments threw money at corporations or give them massive tax breaks to allow them to take care of the problems, themselves. But those days are past.
In our time, governments simply don’t have multi-billions to hand to industry as the massive economic growth that was a consequence of massive population increases (courtesy of the baby-boom generation) are long past — and massive corporate tax breaks just aren’t possible as the present corporate tax rates can only be termed ‘marginal’ compared to the ‘heavy’ corporate tax rates of the 1950’s – 1990’s.
All of this means that the British government must begin to see UK companies as ‘part of the solution’ to Britain’s economic future as opposed to ‘part of the problem’ — which is how the corporate world was viewed by government in the pre-2000 era.
High growth is a wonderful thing for senior executives, it’s a great thing for a sitting government, but it means the people in the bottom-three quintiles face ever-lower wages, more unemployment, resulting in a lowered standard of living for those citizens. And let’s not forget, lower standards of living directly and always equate to higher healthcare costs so there’s no savings anyway. At least, not for governments or families.
While the days of fixing everything with one silver bullet are over, there is still plenty the UK government can do to boost GDP; By assisting manufacturers to re-learn how to export and find new markets, helping industry to boost productivity by redirecting education towards the always changing needs of industry, by providing additional R&D tax breaks for companies — and to provide decent jobs for those left behind via massive and ongoing infrastructure spending programmes, rather than have them rely on eternal government support.
It’s clear that Building a Better Britain begins and ends with Building a Better Economy
Therefore, as important as every other matter before government is (including Brexit!) it’s all for naught if the economy begins to fail, because when the economy fails, so does industry, society, and governments, which tend to fall… hard. Just ask any former politician.