An open letter:
Dear Sir/Madam,
It may have escaped your notice, as it had mine, that when the British
government throws its influence into defending “The City of London”,
they are actually defending a quasi-autonomous/autonomous offshore tax
haven which happens to be geographically situated in the heart of
London. The “City of London” has its own mayor, police force, and is
not directly accountable nor subservient to the British Parliament or Queen – having arrived at, and sustained ever since, a murky
independence with the Norman Invaders in the 11th Century.
The “City of London” is regarded as the second largest offshore tax
haven in the world (see Treasure Islands by Nicholas Shaxson), sitting
at the center of a web which extends from taxhavens/secrecy
jurisdictions such as the Cayman Islands, Bermuda, the British Virgin
Islands, Monserrat, filtering dirty money into the inner ring of “Crown
Dependency” tax havens/secrecy jurisdictions such as Jersey, before it
is funelled into the “City of London”. All these places are
“quasi-indepdendent” – being firmly under the control of the ruling
elite in the U.K. when it matters, but not in the eyes of the law -
allowing them to escape regulation and inspection.
Consider this for a moment in the context of yesterday’s quote by John
Major (an ex-British Prime Minister) :
Major said: “The proposal at the moment for a financial transaction tax
is a heat-seeking missile proposed in continental Europe aimed at the
“City of London”. If there were such a tax about 80%, 85% of the yield
would come from the City of London.
“Now it is not surprising that the British are upset, if we were
proposing [taxes] on luxuries like wine I dare say some of our
continental partners would think we were being rather unfair to them.
Well that’s the position for us. We can’t accept a financial transaction
tax. I don’t think we will have to, but the proposal adds to
Euroscepticism and yet in many ways it’s a paper tiger.”
Assuming that Mr Major’s figures are accurate, 80 to 85% of the
financial transactions within the E.U. which are currently conducted
occur within the “City of London”.
That is an enormous concentration of money, and power. The suggestion of
Merkel, based on the American idea of a Tobin tax, is to apply a tax of
0.1% to share transactions, and 0.01% to derivatives – to dampen
speculators being to easily able to herd and concentrate monetary flows
into attacks on currencies, nations and corporations.
Why is Mr Major then neatly steps into a shameful analogy to keep the
common man hating the euro, proposing to tax luxuries like wine (kick
the French).
Think about this for just one moment. Isn’t wine already taxed? Yes,
at the French 5.5% reduced VAT rate. Furthermore, when French wine is
sold in the U.K., that transaction is taxed at 20% by the U.K.
government. All transactions in Europe fall under Value Added Tax (VAT),
but financial transactions do not. Why are financial transactions not
taxed? Do they really add no Value?
Mr Major is, however, right in one sense when he refers to financial
transactions as a luxury – they certainly do not belong to majority.
These transactions are managed and profited from by a tiny elite. Their
profits are generally not taxed anywhere in the world, as tax
havens/secrecy jurisdictions allow them to operate outside national
control, in a world where there is (still) no global taxation body.
Secrecy jurisdictions and financial transactions are increasingly used
in a criminal manner, not just for gambling, but bullying and mugging
weaker players (national or corporate) for their assets and profits
through tricks like transfer pricing, leveraged buyouts, blowing asset
bubbles, and currency speculation to name but a few – so why are Prime
Minister Cameroon and Prime Minister Major leaping to the defense of the
“City of London” – when it does not pay tax to the U.K. and operates as
a quasi-autonomous, unaccountable nation inside a nation?
I am not in a position to know, but I can guess:
1) Exposure. It seems unlikely to me, were this tax phased in by
Europe, that the “City of London” would end up paying any tax
whatsoever, as (like Jersey) it is not strictly speaking a part of
Europe. The U.K. signed its agreements, but the “City of London” is
something else, more murky and ill defined. Europe is a “Rechtsstaat” – a
group of States governed explicitly by a publically accessible law. The
U.K. cannot co-exist with such a system – where the U.K. culture of law
is deliberately ambiguous, non-codified, and free to be manipulated by
those with the power to do so, as freely as they like. Furthermore,
there are very, very few people in the U.K. who understand what a Crown
Dependency is, or what the “City of London” is in relation to the rest
of the country. It is kept that way very deliberately. I do not believe
I have ever read an article in any British newspaper, or seen a program
on any British television channel which has ever discussed or analysed
this critical structure at the heart of our capital city. To have its murky underbelly exposed would do great harm to the U.K. in Europe, to its legitimacy before its own people, and also display the source of its power to the world.
2) Class. The class system is alive and kicking in the U.K. 70% of UK land is owned by 1% of the population (Source: http://EzineArticles.com/1139145). The largest private landowner is the Duke of Buccleach with 270,000 acres – his family descend from a Norman invader Hugh de Gras Veneur who seized land in Cheshire after 1066.
Where do the sons and daughters of the elite go to earn their money after their
private education? The “City of London” drives a very sensible deal. It
will make/keep the Scions of the elite wealthy, living in the standard
to which they are accustomed, with intellectually unchallenging work
(which does, however, also maintain the social fabric of the elite
through its constant network of social interaction) and multi-million
pound bonuses.
3) Influence. As the “official” British Empire collapsed, the “City of
London” managed both to maintain and extend the financial influence that
empire had brought it. This is the other side of the bargain. For the
British Government to protect the “City of London”, will they not be
receiving in return, a limited ability to rent that influence for their
own purposes?
4) Corruption. “In 2009 the OECD published a detailed study examining
so-called regulatory capture, where government regulators are taken over
by sectional interests like Banks. ‘We found there was a huge number of
connections of people who had gone through the revolving door to the
banks and back again, with alarming speed’ said David Miller, who led
the research. ‘The biggest banks had the most concentrated connections,
and the countries that had the biggest connections were the UK, the US
and Switzerland’” (Treasure Islands – Shaxton). What does this mean in
practice? “When the government launched an inquiry in 2008 into the
financial crisis, every single one of the team’s twenty-one members had
a background in financial services : four were from the City Corporation
itself (“City of London”) including the lord mayor and two former lord
mayors. The review was led by Sir Winfried Bischoff, a former Citigroup
chairman” (Treasure Islands – Shaxton). This level of influence is
abnormal, even in terms of U.K. history – reflecting the wane in the
nation’s power, and rise in the power of the “City of London”. This is
an inherently, deeply, undemocratic and corrupt relationship.
Please do more to highlight what is going on behind the scenes. At the
very least, carefully and fully review “Treasure Islands” by Nicholas
Shaxson (www.amazon.co.uk/Treasure-Islands-Havens-Stole-World/dp/1847921108/). This is an issue which affects us all.
Kindest Regards,
Benjamin Senior