Practical steps to tackle tax evasion ahead of G8

Several overseas territories along with the Cayman Islands and the Crown dependencies of Guernsey, Jersey and the Isle of Man have agreed to join and take an active part in the multilateral Automatic tax information exchange launched by UK, France, Germany, Italy and Spain. Joining the Multilateral Convention will allow more countries to quickly benefit from greater levels of tax information exchange. This will be particularly beneficial for developing countries as it allows them to sign up to one multilateral treaty rather than several bilateral arrangements. The action plans on beneficial ownership they have committed to produce will ensure much greater clarity about who really owns, controls, and benefits from companies.This follows an announcement from Prime Minister David Cameron on new rules to bring unprecedented transparency on company ownership, and will make it harder to launder money, evade and avoid tax, finance terrorism, bribe officials, hide stolen assets and evade financial sanctions.
The full statement was as follows: We, the Political Leaders of the Overseas Territories of Anguilla, Bermuda, British Virgin Islands, Gibraltar, Montserrat and Turks and Caicos, warmly welcome our meeting with the Prime Minister today to discuss Tax, Trade and Transparency, where we had a very clear agreement and constructive exchange of views on the practical steps needed to tackle the global problem of tax evasion and how the UK and the Overseas Territories will continue to apply our high standards of regulation to address this.

As part of our contribution to advancing this global agenda and to create a level playing field right across the world, different Overseas Territories at different times, and now unanimously, have reiterated and confirmed our agreement to the following three (3) important steps: 

• To play an active part in the new pilot initiative of multilateral automatic tax information exchange launched by the UK, France, Germany, Italy and Spain;
• To prepare national action plans on Beneficial Ownership to meet the FATF standards;
• To commit to joining the Multilateral Convention on Mutual Administrative Assistance on Tax Matters.

It is our collective view that as we free up the world economy we must make sure openness delivers benefits for rich economies and developing countries alike and that we maintain confidence in the fairness and effectiveness of our tax systems and in the operation of global markets. Tackling tax evasion and fraud is a global responsibility in which we will continue to play our full part.

We welcome the Prime Minister’s willingness to work in partnership with us in seeking to achieve a step change in international standards and establishing a global level playing field through the UK’s G8 Presidency.

As part of our continuing commitment to tackling tax evasion and fraud, we have also undertaken to prepare Action Plans setting out the concrete steps, where needed, to fully implement the Financial Action Task Force standards to further increase our already high standards of transparency on beneficial ownership information and to ensure that this information is available to law enforcement and tax authorities in accordance with our established mutual legal assistance cooperation regimes.

 The Multilateral Convention on Mutual Administrative Assistance in Tax Matters is an important global instrument, which builds upon our existing network of many bilateral agreements and other existing arrangements for exchanging information between tax authorities. The Convention offers an accessible route to increase the number of jurisdictions which will be able to benefit from information exchange. It is for this reason that we have committed to joining the Convention and have requested its extension to our jurisdictions as soon as possible, subject to our national procedures and the need for ensuring the achievement of a global level playing field.

 We are committed to continuing to play a leading role in delivering a fair, responsible and effectively regulated global business environment.

 We express the hope that the UK Prime Minister will succeed at Lough Erne in securing a new global standard and all Leaders will commit to move together on this common agenda designed to secure more economic growth.

As part of our contribution to advancing this global agenda and to create a level playing field right across the world, different Overseas Territories at different times, and now unanimously, have reiterated and confirmed our agreement to the following three (3) important steps: 

• To play an active part in the new pilot initiative of multilateral automatic tax information exchange launched by the UK, France, Germany, Italy and Spain;
• To prepare national action plans on Beneficial Ownership to meet the FATF standards;
• To commit to joining the Multilateral Convention on Mutual Administrative Assistance on Tax Matters.

It is our collective view that as we free up the world economy we must make sure openness delivers benefits for rich economies and developing countries alike and that we maintain confidence in the fairness and effectiveness of our tax systems and in the operation of global markets. Tackling tax evasion and fraud is a global responsibility in which we will continue to play our full part.

We welcome the Prime Minister’s willingness to work in partnership with us in seeking to achieve a step change in international standards and establishing a global level playing field through the UK’s G8 Presidency.

As part of our continuing commitment to tackling tax evasion and fraud, we have also undertaken to prepare Action Plans setting out the concrete steps, where needed, to fully implement the Financial Action Task Force standards to further increase our already high standards of transparency on beneficial ownership information and to ensure that this information is available to law enforcement and tax authorities in accordance with our established mutual legal assistance cooperation regimes.

 The Multilateral Convention on Mutual Administrative Assistance in Tax Matters is an important global instrument, which builds upon our existing network of many bilateral agreements and other existing arrangements for exchanging information between tax authorities. The Convention offers an accessible route to increase the number of jurisdictions which will be able to benefit from information exchange. It is for this reason that we have committed to joining the Convention and have requested its extension to our jurisdictions as soon as possible, subject to our national procedures and the need for ensuring the achievement of a global level playing field.

 We are committed to continuing to play a leading role in delivering a fair, responsible and effectively regulated global business environment.

 We express the hope that the UK Prime Minister will succeed at Lough Erne in securing a new global standard and all Leaders will commit to move together on this common agenda designed to secure more economic growth.

European unemployment reaches new high

(Reuters) - Unemployment has reached a new high in the euro zone and inflation remains well below the European Central Bank's target, stepping up pressure on EU leaders and the ECB for action to revive the bloc's sickly economy.

Joblessness in the 17-nation currency area rose to 12.2 percent in April, EU statistics office Eurostat said on Friday, marking a new record since the data series began in 1995.

With the euro zone in its longest recession since its creation in 1999, consumer price inflation was far below the ECB's target of just below 2 percent, coming in at 1.4 percent in May, slightly above April's 1.2 percent rate.

That rise may quieten concerns about deflation, but the deepening unemployment crisis is a threat to the social fabric of the euro zone. Almost two-thirds of young Greeks are unable to find work, exemplifying southern Europe's 'lost generation'.

Economists and policymakers including Germany's finance minister, Wolfgang Schaeuble, have said the greatest menace to the unity of the euro zone is now social breakdown from the crisis, rather than market-driven factors.

In France, Europe's second largest economy, the number of jobless rose to a record in April, while in Italy, the unemployment rate hit its highest level in at least 36 years, with 40 percent of young people out of work.

"I've sent CVs everywhere, I come to the unemployment agency every day, for 3 or 4 hours to look for work as a truck driver and there's never anything," said 42-year old Djamel Sami, who has been unemployed for a year, leaving a job agency in Paris.

Thousands of demonstrators from the anti-capitalist Blockupy movement cut off access to the ECB in Frankfurt on Friday to protest against policymakers' handling of Europe's debt crisis.

Some economists believe the ECB, which meets on June 6, will have to go beyond another interest rate cut and consider a U.S.-style money printing program to breathe life into the economy.

"We do not expect a strong recovery in the euro zone," said Nick Matthews, a senior economist at Nomura International in London. "It puts pressure on the ECB to deliver even more conventional and non conventional measures."

In the past, the euro zone has needed economic growth of around 1.5 percent to create new jobs, according to Carsten Brzeski, an economist at ING. With the Organisation for Economic Cooperation and Development forecasting this week that the euro zone economy would contract by 0.6 percent this year, unemployment is set to worsen long before it turns around.

"We do not see a stabilization in unemployment before the middle of next year," said Frederik Ducrozet, an economist at Economist at Credit Agricole in Paris. "The picture in France is still deteriorating."

5.6 MILLION YOUNG JOBLESS

ECB President Mario Draghi, whose pledge to buy the bonds of governments in trouble helped protect the euro zone from break-up last year, has so far left the onus on governments to reform.

A majority of economists polled by Reuters do not expect the ECB to cut its deposit or main refinancing rates soon, although the OECD this week called for the bank to consider printing money for asset purchases to revive growth.

ECB policymaker Ignazio Visco said on Friday it stood ready to take further action but that monetary policy alone could not solve the euro zone's economic problems.

The Commission, the EU's executive, told governments this week they must focus on reforms to outdated labor and pension systems to regain Europe's lost business dynamism, shifting the policy focus away from debilitating budget cuts towards growth.

EU leaders are expected to put the problem of joblessness at the forefront of a summit in Brussels at the end of June.

European Council President Herman Van Rompuy, who chairs the meetings, said last week youth unemployment was one of the most pressing issues for the 27-nation European Union as a whole.

Ministers from France, Italy and Germany called this week for urgent action to tackle youth unemployment, with Schaeuble describing it as a "battle for Europe's unity" and warning of revolution if Europe's welfare model is abandoned.

In April, 5.6 million people under 25 were unemployed in the European Union, with 3.6 million of those in the euro zone.

Even if governments take on unions and vested interests to enact reforms, they will take time to produce benefits.

Time to shake up banking in the UK

The news that the Co-operative bank could be in serious trouble is just the latest indication that the banking model in the UK needs to be shaken up.

Most of the major UK banks needed state support during the financial crisis and the need to separate wholesale or commercial banking from the retail arm has been strongly suggested.
New players in the UK banking sector such as Metrobank and Virgin Money have been set up to provide an alternative to the established banks and are finding a gap in the market.

Metro Bank was Britain’s first new High Street bank in over 100 years.  They have stores rather than branches. They say that they offer banking focused on the customer through unparalleled levels of service and convenience.  They have what they believe is a unique, customer-focused retail business and are reinventing the rules of retail banking, making every effort to remove all stupid bank rules from their day to day services to offer simpler and more convenient banking to their customers.  

They aim to "exceed the expectations of our customers every day by providing a traditional face to face service in all of our stores with no requirement to book an appointment to discuss your banking needs and card and cheque printers so that you can walk away with everything you need to start using your account immediately".

Virgin Money aims to make everyone better off. Like all Virgin companies, Virgin Money was launched to give customers a better deal. Customers of Virgin Money are presented with lounges that are intended to be about more than money and banking. They are intended to be places where customers can relax and where local communities can come together. Virgin Money's aim is to offer " a wide range of great value financial products that are easy to understand and sort out. In today's busy world our customers tell us it's why they choose to deal with Virgin rather than anyone else."

Like Virgin Money, M&S Bank aims to offer a new style of banking, putting the customer first and providing straightforward financial products with great customer service.

The rapid growth of this new breed of banks, shows how far the larger, multi-national banks have moved away from the needs and demands of retail banking.
Like other financial products, such as insurance, the consumer is confused by the complexity of what is being offered making it difficult to compare products and offerings for even the most financially astute.

Without reverting to a barter system, money remains the oil of the machine that is the economy. Imperfections and complexities in the banking system make the smooth running of the economy more problematic regardless of whether you view this from a capitalist, free market or socialist, state intervention perspective.

The core banking system needs to run smoothly. The UK and other countries are trying to use quantitative easing to promote growth because interest rates have already hit rock bottom. However, the banks are now using this extra money to restore there own strength and are lending on a cautious risk averse basis. Some would say too cautiously.

Should this process be in the hands of the corporations driven by profit motives? If the market is operating properly, new players will enter the market to restrict the ability of the existing banks to manipulate the market and make super profits. To a degree as highlighted above this is happening albeit rather slowly.

The problem remains that the complexity of the current banking system makes it difficult for people to understand and obtain or even know what they actually want.

State intervention is required to ensure that the regulators are meeting the needs of the consumer in this market place. The recent financial crisis suggests that the market itself can not work quickly enough to control banking and the regulators across the world have been lagging dangerously behind.

Unfortunately the current trend in regulation is to gain the necessary expertise by utilising the specialist knowledge within the major entities that participate in the sector. This is a dangerous conflict of interest that is repeated in many sectors. To a degree this is inevitable in a world that is ever more complex.

The Bank of England as the UK central bank needs to take a more active role in the market place to work with the regulator to control the excesses of the banks within the UK banking system and to enable the monetary policy to be more effective as a stimulus for the economy.

There must be a clear distinction between retail banking, which needs to be run with a greater degree of social responsibility to protect the individuals forced to use the banking system on a day to day basis and the voracious appetite of the banks to take risks chasing ever increasing profits.

If this is not achievable, then is it time to look at alternatives such as barter systems?