Economics

There’s no surprise that the Institute of Economic Affairs wants the UK to be a tax haven: it fits with their agenda of destroying fair markets

Published by Anonymous (not verified) on Mon, 24/02/2020 - 9:08pm in

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Economics

I could not help but be amused by this juxtaposition in The Times this morning:

I presume KPMG did not ask to be associated with this feature from Mark Littlewood of the Institute of Economic Affairs, but as the biggest tax havens operator amongst the Big 4 accountants I doubt they object.

Littlewood is spouting his usual nonsense as far as I can see. The IEA has been promoting tax havens throughout its existence. After all, it survives and thrives on secrecy, having never disclosed its funders.

And it exists to promote inequality.

Whilst its respect for the rule of tax law is not great. Just read Richard Teather’s book on tax havens for them published in about 2005 as evidence of that: it got as close to endorsing the merits of tax evasion as a mechanism for undermining the democratic choices of government as I suspect it dared go.

And now in post-Brexit Westminster, where the Institute of Economic Affairs is closer to the heart of government than it has ever been here is its director suggesting the UK embrace the idea of being a tax haven.

So let’s summarise what that means. It firstly requires that the transparency necessary for the proper operation of markets be denied. Littlewood is, then, arguing against proper markets.

And he is arguing that the UK should seek to be the depository for the proceeds of crime and corruption.

Whilst he is arguing that the UK should engage in economic warfare with the world's democracies to undermine the tax that they have the legitimate right to collect.

And he is arguing, as already noted, for the increase in inequality in society that tax havens promote and which is so harmful to markets and society at large.

This is what embracing a tax haven means. And what is worrying is that there will be those who will listen to him.

Tackling the housing crisis

Published by Anonymous (not verified) on Mon, 24/02/2020 - 8:29pm in

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Economics

I have just noticed that a letter I was a signatory to was published in The Observer yesterday:

Tackling the housing crisis

Polly Neate is right that “social housing and homes for first-time buyers don’t have to be either/or”.(“Britain has a housing crisis: First Homes is just a comfort blanket”, Comment) They do have to be a both/and.

A new way out of our dire housing crisis into truly affordable housing for low- and middle-income, renters and first-time buyers must be found. The growing numbers of homeless demand it, as do nurses, police, bus drivers, carers, cleaners and others in low-paid essential services.

For too long, local authorities have used high-value public land to help developers build private housing with rents and prices that are too high. All public land ought to be reserved for building only truly affordable social housing to rent or to buy, while prioritising building homes for low-income homeless renters. Also, the length of time that land or property can be left unused or empty should be limited to six months.

Reverend Paul Nicolson, Taxpayers Against Poverty; Tom Burgess, Progressive Policy Unit; Professor Danny Dorling, University of Oxford; Fred Harrison, Land Research TrustStephen Hill, director, C2O futureplanners; Will McMahon, director, Action on Empty Homes; Professor Richard Murphy, City, University of London; Jennifer Nadel, co-director, Compassion in Politics; Paul Regan, chair, London Community Land Trust; John Tizard, social activist & strategic adviser

The chance of a global downturn is growing

Published by Anonymous (not verified) on Mon, 24/02/2020 - 8:16pm in

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Economics

There is nothing like fear to spook markets. And the closer fear is to home the bigger the spook potential.

That’s why Coronavirus has now got to the stock market. When it was far off China, and relatively remote South Korea it was one thing. Now it’s in Italy it’s another, altogether.

The result? As I write some parts of the stock market are down 10% or so. The parts relate to tourism, to Italy in particular, but Europe more generally. People, whether rationally or not, think other people will be deciding not to travel any time soon. And the result is the beginning of an economic wobble. All downturns happen because of such things. This might just be the start of the long awaited next global downturn for which we are well overdue. But if (and I stress the if) it is, it’s not the cause of it.

The reason why concern about tourism is not the cause of the next global downturn should be obvious. Tourism is important, but not that important unless you’re an airline shifting people to their destinations, or are the destination location. The reality is that tourism will still happen: people (here at least) will simply stay at home, but will still go on holiday. That’s bad news for the tourist destinations but good news for the UK. This is not enough to create a downturn in itself then, I suggest.

The downturn, if it happens, comes for much more fundamental reasons. And that is that unless things change very rapidly it is not just tourists who will not be travelling; it will be goods that will not be moving. The prospects of that happening seem to me to be growing, even if the outbreak gets not much worse than it is now. That is because stocks of Chinese products are already running out in some sectors and new ones are either not being made, or are not getting out. And in in interrelated, globalised world, where maybe 25% of all products that we rely on are made in China, and the components for many more (including essential supplies, such as some drugs) originate there this is the real cause for economic concern. What amazes me is that markets have not already really reacted to his, as if such fundamental things as good moving are of no consequence to financial markets until it impacts on someone’s holiday plans.

I am not saying that Coronavirus will cause the next global downturn. I am saying that it is looking increasingly likely that it will.

And if it does it will be something much more significant than that: this will be the biggest challenge globalisation will have seen to date. If that happens we’re heading for a transition to a new type of global economic relationship faster than anyone has expected.

What was that saying about living in interesting times?

We could take action now to deliver climate change accounting

Published by Anonymous (not verified) on Mon, 24/02/2020 - 7:38pm in

There is a damning indictment of the International Financial Reporting Standards Foundation this morning in the FT. Discussing the need to address climate change reporting, George Serafeim, who is Charles M Williams professor of business administration at Harvard Business School, said:

The environmental and social challenges we face require immediate action. An overhaul of accounting standards, while welcomed, would take too long. Capital markets could bring that change faster.

I am not suggesting I actually agree with his answer - which remains off balance sheet accounting. But the comment he made resonated with an idea that I explored with a journalist last week, when I suggested to them that the time has come to work around the international accounting standards setting process since it now seems to now an impediment on this issue, regrettable as that might be.

My suggestion to the journalist that I spoke to was that the UK Financial Reporting Council could and should take a lead on this issue and demand that all UK based companies deliver sustainable cost accounting for climate change as an addition to their IFRS reports.  I do not dispute that issues would arise. But in view of the urgency of this matter I can see no reason why the FRC cannot take a lead here, followed (I hope) by the European Union.

I happen to think Michael Izza, chief executive of the Institute of Chartered Accountants in England and Wales has lent some support to the idea, whether inadvertently or otherwise, in a new blog post he has out. In it he tackles the issue of audit reform. Some of what he has to say is vague and it is hard to discern his precise meaning. But one quite clear suggestion is this:

On-demand audit extras

Fourth, [I suggest] something new – on-demand audit extras. Assurance of virtually any area of corporate activity is possible, from sustainability delivery to cyber security to human rights compliance, and we would welcome a mechanism which allowed additional checks to be commissioned by a range of stakeholders, to supplement the statutory audit. Not only does this reflect how 21st century business is evolving, with many mission-critical aspects of corporate performance not being visible through traditional financial reporting, it may also increase competition and choice in the market by encouraging the development of niche providers with particular assurance specialisms. That said, all providers, in all areas of assurance, will need to operate to agreed and adequate standards.

So, we could have an audit of a company’s sustainability. In that case we could also have additional on balance sheet reporting on that issue as well.

Time is not on our side here: climate change accounting needs to be in progress, now. The ICAEW is added to my list of those who could take unilateral action on this. And should do so. There is first mover advantage for those who claim it.

Pension and ISA funding of the Green New Deal has to be amongst the Chancellor’s budget proposals

Published by Anonymous (not verified) on Mon, 24/02/2020 - 6:59pm in

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Economics

I have already suggested that the new Chancellor should abandon any pretence that there should be a fiscal rule when presenting UK’s budget on March 11. That is because there are higher priorities that only government spending can deliver. Larry Elliott identified one of them in the Guardian yesterday. As he said:

[U]nless [the Chancellor] can ... find a way of making the budget consistent with the government’s 2050 net zero carbon target for the economy a diplomatic failure of catastrophic proportions looms at the end of the year.

His reasoning is:

The Cop26 is the most important summit the UK has hosted since the G8 met at Gleneagles in 2005 – and the task facing the government is much more daunting than it was then.

This is undoubtedly true, not least because the issues are so much bigger and the political will, at least in the UK, so much smaller. But as Larry notes:

All of which brings us back to the budget, which provides an opportunity for the government to announce measures that will accelerate the UK’s progress towards a decarbonised economy. These need to be more than the mooted increase in fuel duty.

As he then notes:

The Green New Deal Group (of which I am a member) has estimated it will cost about £100bn a year for 20 years to make the transition to a net zero carbon economy. Investment on that sort of scale would be necessary to make the UK’s 30m buildings energy efficient, turn buildings into power stations through the use of solar panels, and invest in renewable energy.

And then there is the critical question:

So where’s the money going to come from? One answer would be a form of green quantitative easing – money creation by the Bank of England that would pay for the decarbonisation of the economy rather than, as was the case during and after the financial crisis, being pumped into the banking system. The government doesn’t seem keen on this approach, even though there are plenty of economists who think it is wholly feasible.

Another possibility would be for the government to borrow the money in the usual way, but this doesn’t appeal to ministers either.

And then we come to the nub of this:

There is, though, a third option. At present about £100bn year is paid into pension schemes, all of it eligible for tax relief currently worth £54bn a year. There is also tax relief on the £70bn a year invested in Isas. The GND proposal is that 25% of pension contributions should go into green new deal investment in exchange for that tax relief and that all new Isa contributions – which currently go into cash or shares – should be invested in green new deal bonds issued by the government at a guaranteed rate of interest.

The idea is to provide a stream of income to transform the economy as well as offering a new secure investment vehicle for savers. Insurance companies and pension funds no longer risk being left with stranded fossil fuel assets and the City would be the place to do green finance. Above all, a strong signal of intent would be sent to the rest of the world.

Of course I am biased about this: these ideas might have begun life on the same keyboard that I am typing on now. But, candidly, this is the route to funding this.

As I have already explained this morning, government debt is actually the flip side of public saving. And all debt has, of course, to be sold. So the job required to fund the Green New Deal is simply to match the right customer with the right government created funding arrangement.

That is what this proposal is all about. It matches pension and ISA bond holders (and most ISA accounts are in effect savings bonds, already) with the Green New Deal. Add in a competitive rate of interest, and abandon the absurd idea that the government may not compete in this market when the private sector has no constructive use for the savings offered to it, and there is a winning proposition in here that suits the government, those seeking a secure rate of return on their savings and those wanting a Green New Deal at no tax cost. Add in the fact that there is a growing move by savers towards safe assets - and with good reason - and this is a winner.

There is nothing else on the table that is.

Rishi Sunak needs to take note.

There is no point in further fiscal rules when the only objective we should have is full employment at low inflation

Published by Anonymous (not verified) on Mon, 24/02/2020 - 6:10pm in

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Economics

The financial media is moving into pre-budget comment mode this morning. According to the FT:

Rishi Sunak will have to raise taxes, bend his fiscal rules or do both if he wants to meet public expectations of an end to austerity, according to a report by the Resolution Foundation.

The think-tank said the chancellor would otherwise have no leeway to increase day-to-day spending on public services, even if he benefited from a modest improvement in the outlook for the public finances and pushed back the date at which the government aims to balance the current budget.

There really is only one appropriate response to that, which is that the time has come to abandon such rules. There are a number of very good reasons for thinking this appropriate.

The first is that no one has ever found a fiscal rule that works.

Second, all fiscal rule have as as a result been bent, abused or just ignored in that case.

Third, this very strongly suggests that they do not serve an economic role of any real value.

Fourth, this also makes clear that at most they are exercises in political expediency.

Fifth, and most importantly, this expediency is the result of the use of a false economics when creating such rules.

What is the false economics? It is, of course, the use of the household analogy. That is the pretence that a government with its own central bank and own currency and with the ability to issue its debt solely or almost entirely in its own currency can, despite these facts, fail to pay its debt when as a matter of fact that cannot be true: such a government can always issue currency to pay its debt. As a result its debt is never a burden on it.

But this false economics is worse than that. Such a government actually has no debt in the strict  sense: what it has done is create currency and has provided an interest bearing depository for it. The so-called debt is not a burden on future generations; it is instead private wealth that some in future generations will be more than pleased to inherit. There may be debate on the equitable nature of that inheritance, but to pretend that this private wealth is a burden on future generations is absurd.

And yet, implicit in all fiscal rules is the idea that this most secure form of private wealth, beloved of savers since the time of Jane Austen (in whose novels it frequently features), should be eliminated. Or at least it should be restricted in supply. And that is always to stop the private sector being ‘crowded out’ by it. In other words, the aim is to stop the efficient government being so good at what it does that the private sector should be given a chance to compete.

Except we’ve done that for decades. And it hasn’t worked. The private sector does not step up to the mark.

And that is why fiscal rules don’t work. They try to deliver opportunity for the private sector to do things it cannot do, or does not want to do, or does not think worth doing, but which are needed nonetheless.

Fiscal rules are about holding back funding for the state for what needs to be done when the result is nothing is done. No wonder they fail. And they’re, in any case, based on economic thinking that is simply wrong because they presume finance is the issue.

Finance is not the constraint in macroeconomics. Money is always available in a country like the UK. Inflation is, instead, the constraint whilst full employment is the goal. But holding back available finance is like imposing rationing on a country where all can be plentifully fed for the sake of encouraging the production of food of types that no one wants. It’s that absurd.

Our new Chancellor should not try to find a new fiscal rule. He should have an economic rule instead. He should target full employment at low inflation. Only government spending can deliver that. Turn it on.

The ‘New Keynesian’ Monetarist fantasy is finally over

Published by Anonymous (not verified) on Sun, 23/02/2020 - 9:20pm in

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Economics

Kenneth Rogoff of Harvard recently argued that fiscal stabilization policy “is far too politicized to substitute consistently for modern independent technocratic central banks.” But instead of considering how this defect might be overcome, Rogoff sees no alternative to continuing with the prevailing monetary-policy regime – despite the overwhelming evidence that central banks are unable to […]

The temperature is literally rising but the Financial Reporting Council is not feeling the heat

Published by Anonymous (not verified) on Fri, 21/02/2020 - 6:28pm in

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Economics

As the FT reported yesterday afternoon:

Companies and their auditors will be more closely scrutinised over how they report the impact of climate change, under a new push by the accounting watchdog to provide investors with greater transparency.

The Financial Reporting Council said on Thursday it would undertake “a major review” of the way UK businesses disclose climate risks in their reports and accounts, to ensure that recently increased requirements are being met.

Checking out the Financial Reporting Council web site did not leave me feeling optimistic about this review. In essence they are saying that they intend to review a sample of company reports and accounts across industries to assess the quality of their compliance with reporting requirements in relation to climate change whilst also considering the audit and governance dimensions to this issue, and that they will take note of the Task Force on Climate-related Financial Disclosures’ requirements when doing so. However, at no point do they suggest that you will consider four issues that seem to be of great significance if an appropriate response from the accounting community is to be made to the climate crisis that we face.

The first is that this is the biggest social and economic change now facing the human race. Every business is, therefore, impacted.  Accountancy cannot ignore that fact and remain relevant. And yet the FRC is not suggesting changing anything when undertaking this review. There is no recognition that the paradigm is changing.

Secondly, although the scale of this crisis means that reporting must be both mandatory, and audited and that this requires any disclosure to be within the financial statements and not in ESG or other reports the FRC do not appear to be reviewing this requirement.

Third, although this issue is vital to all the stakeholders of a company, including its investors, the FRC provides no acknowledgement of this.  What it does not suggest is how all those stakeholders will learn if a reporting entity can make the transition to be net-zero carbon, or whether it has access to the capital that will be required to make this happen. This is a financial reporting issue, and so an accounting issue, and so has to be on the balance sheet, but the FRC shows no sign of being aware of that as yet.

Last, accounting is not neutral: it should both report and encourage good practice. Requiring that provisions for the cost of climate change be reported now on the balance sheet of the larger entities (at least) that will be most impacted is all about providing them with the incentive to make the necessary investments, and to secure the necessary capital to make the required changes to become net-zero carbon as soon as possible, which is exactly what society requires. Again, the FRC does in no way reflect this urgency.

I admit I an biased on this issue: my authorship of sustainable cost accounting makes me so. Equally, I wrote that because I think accounting is missing the point on climate change. The time for token gestures and reviews as to whether existing rules can be applied, and even work, in a world where we know everything has changed are over. Accounting needs fundamental reform if it is to reflect what rally needs to happen on this issue.

The temperature is, literally rising. The Financial Reporting Council is not feeling the heat. It is time it did.

————

I will be writing to the FRC on this issue, and hope others might as well. I hope this post provides some material that might be used. The FRC needs to know that the world will not let them, and the accounting profession,  sit by and watch this crisis happen.

Book Review: The Globotics Upheaval: Globalization, Robotics and the Future of Work by Richard Baldwin

Published by Anonymous (not verified) on Thu, 20/02/2020 - 11:10pm in

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Economics

In The Globotics Upheaval: Globalization, Robotics and the Future of WorkRichard Baldwin provides a new analysis of how automation and globalisation could together shape our societies in the years to come. Drawing on numerous examples to keep readers engaged from cover to cover, this book is a tour de force, writes Wannaphong Durongkaveroj, discussing the past, present and future of globalisation and automation and their implications on the way we work. 

The Globotics Upheaval: Globalization, Robotics and the Future of Work. Richard Baldwin. Oxford University Press. 2019.

Find this book: amazon-logo

There is little wonder that the rise of artificial intelligence (AI) has sparked ongoing debates about the future of work. In The Globotics Upheaval: Globalization, Robotics and the Future of Work, Richard Baldwin, the author of The Great Convergence, provides a meticulous and succinct analysis of how a ‘dynamic duo’ of economic change — automation and globalisation — can shape our societies in the years to come.

Baldwin starts by defining the term ‘globotics’ — a combination of globalisation and robotics. These are not old wine in a new bottle. Globalisation is no longer simply a trade of goods and services across boundaries. It is ‘telemigration’  —  a widespread, new form of work that allows workers to sit in one nation and work in offices in another. Simply put, forget about the crowded office — workers can now deliver services remotely. In addition, a new phase of automation is not just about vast machines and industrial robots that replace blue-collar workers in factories. It concerns white-collar robots — software that performs functions that previously only humans could. An example is ‘Amelia ’— an AI-based digital assistant introduced at the Swedish bank SEB. The first key implication of Baldwin’s argument is that this transformation has happened so quickly. It took just years, rather than a century, for this dynamic duo to emerge, spread throughout the economy and change our lives. Second, it creates upheaval throughout society.

To depict the massive changes brought about by globalisation and automation, Baldwin proposes a four-step progression: transformation; upheaval; backlash; and resolution. First, an advance in digital technology has transformed the nature of jobs. Thanks to collaborative platforms such as Business Skype, Slack and Trello, remote work is possible. This mostly affects jobs that do not require a physical presence: for instance, those in management, business and finance. Moreover, the preponderance of AI-trained robots also disrupts jobs that are automatable. Most of these jobs are in the service sector — the sector in which most people work. Baldwin points out that these changes will not eliminate all jobs, but they will certainly lower the headcount in many service-sector occupations (183). At the same time, this is not a doomsday predicament as the duo also helps create some jobs, especially for workers with specific skills in which the human average scores higher than that of AI.

Baldwin asserts that this unprecedented change can lead to a so-called ‘globotics upheaval’. This happens when people are forced to find new jobs. Society could wind up in economic, social and political turmoil. Baldwin uses the ubiquity of the iPhone to explain how globotics invades our society. They are everywhere, and we could not imagine how to live without them. For remote workers residing in different countries, they may accept lower wages and may not receive other benefits such as insurance and health care. This creates a fierce competition borne by domestic labour markets. People may view this practice of using remote workers or ‘telemigrants’ as ‘unfair competition’ (200), triggering discontent.

Baldwin describes how the globotics upheaval could turn into a violent globotics backlash: a fight between millions of service-sector and professional workers and ‘globots’ (212). Baldwin argues that a failure on the part of mainstream politicians to stop the disruption of communities, the loss of good jobs and the undermining of hope has already resulted, in part, in the twin convulsions of 2016 — Donald Trump winning the US presidential election and the UK referendum on leaving the EU. Protest can be another example of how workers react when their livelihoods and communities are threatened.

Baldwin ends the book with resolution. While it is true that robots are good at many tasks, it is equally true that they are useless in some cases. It is difficult to automate some jobs (e.g. education and technical) and some cannot be carried out from far away (i.e. hotels and restaurants, transportation and construction). Baldwin argues that ‘future jobs will rely heavily on skills that globots don’t have’ (261). These will require face-to-face interactions that stress humanity’s abilities over AI robots; such jobs will be newly created in the future. Overall, Baldwin is optimistic about the transformation. As guided by history, he believes that this will make for a better society.

This book is another tour de force from Baldwin. He discusses the past, present and future of globalisation and automation and their implications on the future of work. With the book offering numerous examples, it is easy for readers to stay with Baldwin from cover to cover.

I do agree with Baldwin’s argument that the ‘globotics transformation’ can have a profound impact on the future of work. However, while the evidence has been observed in advanced economies, the book does not address the implications for the Global South in a detailed manner. This poses a big limitation in a book aimed at extending our understanding of the future of work. Developing countries have been relying on manufacturing for decades to absorb the flood of labour released from agriculture. The result has been swift poverty reduction unmatched in human history. As industrialisation has fundamentally transformed the West in the nineteenth century, East Asia in the twentieth century and now Africa, it is important to know how the duo of automation and globalisation can have implications for development paths in the Global South, given levels of economic development and human capital. Whether the vulnerable services sector can provide more and better jobs than manufacturing remains an unsolved issue.

Moreover, while job creation is always good, the economy also needs better jobs. Take ‘vulnerable jobs‘ — those without formal working arrangements, lacking decent working conditions, adequate social security and labour rights. ‘Telemigrants’ tend to be particularly prone to this vulnerability. Additionally, the focus on the effects of globalisation and automation should not be limited to the creation of new jobs or the loss of the same old. What matters is the quality of the job. As observed by Winnie Byanyima:

It is the quality of jobs that matter. When you talk about low levels of unemployment, you are counting the wrong things. You are not counting dignity of people. You are counting exploited people.

It would be beneficial if the book had shone some light on this vital issue.

In addition, more analysis of the mechanisms of how resultant upheaval could flare into violent protest could complement the chapter on backlash, one of the key parts of Baldwin’s four-step globotics transformation. It is true that rising populism is a reaction to current economic and political situations. Yet, the book does not acknowledge other possible ways that people express their dissent, such as through social media platforms like Facebook or Twitter. Furthermore, the book does not systemically picture how governments can cooperate and deal with the protesters. Not all demonstrations in the street will turn violent. Countries with different levels of democracy and regime repressiveness seem to handle national uprising differently. Think of the recent protests in Hong Kong and Chile.

Lastly, Baldwin argues throughout the book that the future of jobs depends on how quickly new jobs can be created. But another illuminating framework is how firms use their profits. As pointed out by Mariana Mazzucato, the future of work looks grim when new profit is not used to reinvest and expand business but rather to maximise shareholder value through financial instruments. This has happened as finance has come to occupy the core of capitalism — the same period in which we have seen the rise of globotics. No doubt the changing practices of firms can complement Baldwin’s story.

As one of the world thinkers on globalisation, Baldwin offers more than simply a prediction of the future in this book. It belongs on the reading list of all of us who live in this ever-changing world.

Note: This review gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics. 

Image Credit: Photo by Louis Reed on Unsplash.

 


Private Eye Attacks the Tories’ Stupid and Damaging ‘Free Ports’ Policy

Published by Anonymous (not verified) on Thu, 20/02/2020 - 9:52pm in

Eight days ago on 12th February 2020, Mike put up a piece criticising the Tories’ great new wheeze for invigorating Britain’s economy. They want to set up ten ‘free ports’ after Brexit, in which there will be no import/ export tariffs on goods if they aren’t moved offsite. No duty is paid, if these goods are re-exported, so long as they don’t come into the UK. Similarly, no duty will be paid on imported raw materials if they are processed into a finished product, provided that these aren’t then move to the rest of Britain.

Mike comments

No doubt the businesses involved in taking raw materials, processing them and re-exporting them would have their head office based in a tax haven.

So, who benefits? The UK economy won’t!

See: https://voxpoliticalonline.com/2020/02/12/who-will-profit-from-post-brexit-freeports/

This is exactly the same point made by Private Eye in its latest issue for 21st February to 5th March 2020. In its article, ‘Unsafe Havens’, the Eye says

Given Rishi Sunak’s background in offshore finance, it’s no surprise he will soon be turning parts of the UK into tax havens. Just three days before last week’s promotion, the eager-to-please Sunak launched hi spet policy for freeports around the UK.

He first pushed the plan as a relatively new MP in a 2016 paper for the right-wing Centre of Policy Studies. Now he has his hands on the tax controls and can do whatever it takes to entice major investment in the zones (ie big tax breaks and few questions asked).

At this point, warnings from the EU begin to sound ominous. Although Sunak claimed that freeports, which exempt imports from various taxes and tariffs in great secrecy, weren’t possible within the EU, there are in fact 82 of them. But the EU has found they do far more harm than good. And on the very day Sunak launched his consultation promising to “unleash the potential in our proud historic ports, boosting and regenerating communities across the UK as we level up”, the European Commission was clamping down on freeports yet further, pointing to a “high incidence of corruption, tax evasion, criminal activity”.

Even Sunak innocently asks in his consultation: “In your view, are there any particular tax policies that you think could increase the risk of tax avoidance or tax evasion activity being routed through a freeport?” To which the correct answer is: yes, the freeport policy itself.

I was immediately suspicious of this policy, because it looks like an attempt to copy the Chinese ‘Special Economic Zones’. These are islands of unrestricted capitalism in certain provinces, where there are very low taxes and, I believe, employment rights for workers. They have helped to turn the country into an economic superpower, but the cost is immense. There is massive worker exploitation, and there have been well-publicised cases of employees at various companies, who have committed suicide because of their ill-treatment. So much so that one company responsible for extremely poor working conditions put up suicide nets around one of its factories in order to catch staff trying to end their lives but jumping off. China’s an extremely authoritarian state, but there are rumblings of discontent from its impoverished and exploited workers and human rights activists.

Way back in the late 19th and very early 20th century a nasty term, ‘Chinese slavery’, was applied to conditions like this. Part of the impetus in the formation of the early Labour Party was the fear among British workers that the government was going to force them into similar conditions.

The Chinese shouldn’t have to work in such exploitative environments, and neither should Brits – who include people of Chinese descent, who have been here for generations. This is yet another nasty, exploitative idea from a nasty exploitative party, which feels that the workers, whether White, Black or Asian, should be forced into conditions of near slavery.

While they enjoy the profits funneled through tax havens.

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