Some fun stuff and some economics

March 24, 2011

Hello again!

I’d like to bring to your attention some fun stuff I found very recently, and then take a look at what’s happening in the world.

The Internet is an amazing place and I’m a bit of a lurker, but it is being used in ways that are not always wholesome, and I’m not talking about phishing, trojans, worms or spyware et al. I’m talking SPAM! What do you do with this stuff when it drops into your junk box? Well, Online Tech Tips, from a computer guy (Aseem Kishore) has the answer. There’s no point in me explaining it to you because he’s already done the hard work, screen by screen. I love these new tools for making fun out of those who seek to abuse us via our tech, and I also like the visual clouds software that has been produced (wordle et al) because they are nice little pieces of software that people have written and put out into the public domain for us to try them out. Spam Recycling.com is a quirky way to while away an hour on a wet afternoon. . So – to all spammers – we can now turn your dross into an art form!  If anyone manages to produce something really cool, I’ll happily post a copy here for everyone to see and you keep the copyright of your spammer artwork of course! Now, lets see what I can make…………

I’m amazed by the amount of reporting recently on energy use and petrol/gas prices across the world – especially in times of a global downturn, political instability, wars and natural disasters.

Well, let’s start with the Chancellor’s Budget yesterday.  1p off petrol duty and £100m given to councils to fix potholes (Yippeee), but don’t get the champagne out just yet because the oil companies are going to pay 32% tax on their oil and gas production, where they were previously taxed at 20%. Never doubt that this tax will be passed onto the lucky consumer to cover at the pump, as the oil companies have to placate their shareholders with large dividends. The consumer has to find ways to reduce the burden of petrol taxes imposed on them, and many new ideas are being born via Internet services on how to save money to counteract these(hidden) hikes. I’ll be looking at these new Hybrid online services soon as there are a good number of them sprouting up.

So, let’s go back to petrol prices. The UK doesn’t just obtain its oil and gas from the North Sea and surrounding regions, it purchases it in advance on the global commodity exchange markets, known as the futures markets. It’s a complex system, but the price of keeping our cars on the road doesn’t look like it’s going to drop or even stabilise anytime soon, as there’s too much going on in the world that is going to affect world oil and gas prices. The UK doesn’t have the technology to refine certain types of oil, and so relies on other refineries abroad to do it for us. There’s a cost involved – obviously.

I saw this great article in The Economist – that, if you are interested in global economics – will explain what is happening right now in the oil markets. Entitled “Oil Markets and Arab Unrest:  The Price of Fear – A Complex Chain of Cause and Effect Links the Arab World’s Turmoil to the Health of the World Economy”. This article explains how oil prices affect the global economy and how intervention by OPEC, global central banks, and OECD countries can affect it. It also explains what governments are doing to replace the use of petrol/gasoline with alternatives such as replacement biofuels or alternative transport such as electric cars. And finally, what are the renewable energy alternatives that can satisfy Asian country requirements; those who have ongoing and increasing needs for power as their infrastructures grow and their countries become more developed? Also, take a look at the comments posted at the end of the article. It’s such a massive subject, that I’ll be taking a more in-depth look at this, and renewable energy again in later blogs. Feedback as always, is acknowledged and published.  I’ll be back soon.

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And today’s topic is……..tax havens!

February 23, 2011

Hello again!

Well – I thought that after the recent demonstrations against Top Shops’  big boy – it was worth a  deeper delve into the mire of the tax haven. That quiet corner of the universe that swallows up huge chunks of cash that hasn’t been filtered via the tax-man first. That area of taxation where Generally Accepted Accounting Principles have no meaningful place in the world. I’m not just going to look at HMRC (that’s Her Majesty’s Revenue and Customs to the uninitiated) but also at what has been happening on a global scale. There’s lots of places to look because the world is becoming disgruntled – hence the demonstrations –  between those who have and those who don’t have. The mega-rich and the would-be-mega-rich will always attempt to cling onto their earnings (illicit or otherwise) by paying as little tax as they can get away with. Offshore means – what? Its’s the most convoluted and financially complex way of organising money that the world has, in order to divert it away from taxation.

Let’s start with the band U2 for instance. Bono, the lead singer, is always banging on about political freedom and ending global poverty. But when it comes down to his own wealth management – what does he do? Well, let’s see now………..End Tax Haven Secrecy has an opinion here http://www.endtaxhavensecrecy.org/en/2011/02/10/thank-you-bono-now-push-this-to-its-logical-conclusion/ and so does Bridge Over Troubled Waters, here: http://bridgeovertroubledwaters.wordpress.com/2009/02/26/bonos-tax-haven-is-robbing-the-poor/. This issue with U2 isn’t new and goes way back to 2005, when it was first highlighted that the band use offshore financial structures to avoid paying tax in Ireland where they are registered. Is this a case of do what I say and not what I do? Bono’s political rants are legendary, so he’s an easy target for criticism. Even if you do a quick search, there’s a lot of information out there. Another consideration to add to the mix, is that Ireland is a tax haven in its own right, so the Netherlands must be offering an added bonus for taking Bono’s wedge…………

You can check out the Global Financial Integrity web site here: http://www.gfip.org/index.php?option=com_content&task=view&id=189, but note that their copyright has not been updated to 2011 so err on the side of caution and back up any data that you might use by checking another source for accuracy.

One place I look regularly is on the Tax Justice Network http://www.taxjustice.net/cms/front_content.php?idcatart=2 and in particular their blogs, which are crammed full of really good information, that can be reliably sourced. I wrote about this web site last October.  http://taxjustice.blogspot.com/ The main web site provides access to global resources and they keep adding to the site with links to other areas and articles covering really interesting subjects such as withholding tax, extraction transparency, financial poverty, illicit flows of finance, country by country reporting and – of course – tax evasion across the world by corporations and individuals alike. There’s so much information that it’s really worth taking the time to have a delve if this is a subject area that interests you. There’a a financial Secrecy Index here:  http://news.financialsecrecyindex.com/Click on the resources tab for an subject index and don’t forget Transparency International’s Corruption Index web pages, which I have written about previously on this blog, and a related anomaly highlighted by TJN here: http://www.taxjustice.net/cms/front_content.php?idcat=100

Delaware or Isle of Man, Switzerland or Hong Kong? How many tax havens can you name off the top of your head without looking them all up? Actually, don’t bother – it’s all listed here for you: http://en.wikipedia.org/wiki/List_of_offshore_financial_centres and it’s from Wikipedia, so regular readers will know my opinion on Wikipedia. Beware and use it with care because you don’t know who has compiled the data. One reason I say this is because Wikipedia lists London instead of The City of London specifically as a tax haven, and there’s a very distinct difference.

The OECD also provides a list of “Uncooperative” Tax Havens here: http://www.oecd.org/document/57/0,3746,en_2649_201185_30578809_1_1_1_1,00.html and another page provides excellent data on tax and access to a tax database: http://www.oecd.org/topic/0,3699,en_2649_37427_1_1_1_1_37427,00.html. You can also check out the IMF and the G20 web sites.

So now let’s take a visit to another web site that I like. It’s called Tax-News.com http://www.tax-news.com/ and while it is a fee-based service, it’s the free stuff that I value. The journalists are prolific writers and incredibly knowledgeable, providing articles globally for the interested reader. The coverage isn’t just offshore tax; it covers a massive selection of related tax topics from free trade agreements, to alcohol and cigarette tax, shipping tax, secrecy, gaming legislation, special reports and much more. Each country page will point you at specific areas of taxation. Just dive in, because you will like what you find.

Let’s not forget the business press, such as Forbes: http://www.forbes.com/2007/03/15/havens-international-tax-forbeslife-cx_mw_ee_0315taxhavens.html. If you think laterally, there is a wealth of information (pun intended!) in the business press which will include lists such as who’s who offshore and table rankings. See what I mean, here: http://www.forbes.com/2004/04/15/cx_cv_0415feat.html.

The law firms who provide specialist advice on “asset protection arrangements” have lawyers who publish regular legal updates in this area. Look on the Firms’ web sites for free articles and legal updates for legislative changes, especially those who have corporate tax departments like Sullivan & Cromwell or Baker & McKenzie.

And finally, lets take a look at Vodafone in India. What a mess! Even the Bombay High Court can’t sort this one out. It’s related to Vodafone’s purchase of Huchison Whampoa of Hong Hong and the Indian tax authorities’ demand for £1.6bn in capital gains taxes, which it says is owed to them. However, the deal was struck offshore and Vodafone says it is now exempt from paying the tax. http://online.wsj.com/article/SB10001424052748704019604576131410598322674.html

Vodafone also set aside £2.2bn for it’s UK tax bill last year, but then struck a deal with HMRC and paid just £1.25bn in taxes. Of course this has caused outrage  and demonstrations, as reported in the FT: http://online.wsj.com/article/SB10001424052748704019604576131410598322674.html and as reported in many other press reports, including detailed coverage by Private Eye, who thought the bill should have been as much as £6bn.

And so, the world of the offshore tax haven continues to be shrouded in secrecy much as before, despite reports and their protestations that they are opening up to becoming more transparent and more regulated.

As always, your comments and feedback are always welcomed. I’ll be back again soon.