Category Archives: Tax dodging

Record French tax haul shows how much corporate tax dodgers cost us all

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French tax services netted a record 21.2 billion euros from tax dodgers last year. And the biggest culprit was big business, a result that should lead the government to dissolve the units responsible since, like most governments nowadays, practically its sole job-creation strategy is to let companies off paying their fiscal share.

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France’s Economy Ministry Photo: Pline/Open access

More than a quarter of the tax-evasion haul – 5.8 billion euros – came from corporate tax fraud, up from 4.2 billion euros in 2014.

Individual tax-dodgers with secret bank accounts abroad, no doubt panicked by Luxleaks and the UBS investigation, fessed up to the tune of 2.65 billion euros.

“We have to lay to rest this idea that income from tax inspection comes from hammering small taxpayers,” Budget Minister Christian Eckert pointed out in a rare counter to the right-wing – sorry, “centrist” in establishment-speak – offensive against the state collecting its due. “It’s not true! Income from tax inspection comes essentially from big companies.”

The indiscreet junior minister probably won’t keep job for long if he carries on in that vein.

Because France’s Socialist government has pursued an energetic policy of cutting taxes to business, on the pretext that boosting profits will persuade bosses to take on more workers, with only a minor deviation this year in the form of a labour law pretty much drafted by the Medef bosses’ union.

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The share of dividends in French companies’ operation profits

It’s a strategy that has proved startlingly unsuccessful. Unemployment remains at 10 per cent as companies have paid out the tax handouts in dividends, an international tendency to short-term gluttony that is particularly virulent in France.

Given that the 2014 Socialist government contained no fewer than eight millionaires, one can imagine that it feels more collective empathy towards those struggling to maximise their wealth than those struggling to survive on the breadline – even if the cabinet’s net worth must have taken a hit with the departure of the fabulously wealthy Laurent Fabius.

So the DVNI, the division responsible for chasing up companies with a turnover of more than 154.2 million euros at whose headquarters Eckert and Finance Minister Michel Sapin announced the good tax news, would be foolish to aspire to longevity.

If we follow the government’s logic, following the current economic orthodoxy, it should be closed down and those companies allowed to carry on fiddling their tax returns in the hope that they will be kind enough to employ a few more members of the lower orders with the gains made from their accountants’ creativity.

Indeed, the tax windfall, which has been one of the only positive contributions to the EU-ordered effort to reduce the deficit, seems to have been pretty much an accident.

The unit to pursue holders of secret foreign accounts was set up after budget minister Jérôme Cahuzac was found to be guilty of that very offence and forced to resign. His case opened last month and, the defendant having arrived lawyered up, been put off until September.

Successful though the tax inspectors have been, unions have complained that they could do better with more resources.

That’s certainly true if estimates of the level of tax fraud quoted by the ministry are true. They put the figure at 60-80 billion euros, so 20 billion should be just the beginning if ministers were serious about tackling white-collar crime.

Eckert’s statement is important – and not just in France – because campaigning against taxation has been the right’s most effective weapon in winning middle and working-class support for policies that have actually shifted wealth away from most of the population.

Tax is the Achilles’ heel of collectivism. Most of us want good public services but we’d all rather somebody else pay for them. At the very least, we’ll take any opportunity to reduce the amount of tax we personally have to pay. The right has played on that conflict between immediate individual interest and delayed collective gratification with enormous success.

An important component of most right-wing campaigning issues – benefits fraud, migrants, “wasteful” public spending – is an appeal to the wallet. And, although there seems to be growing scepticism about capitalism and a revival of some form of collectivism among the young, Donald Trump, or France’s Front National, are evidence of the kind of mass reactionary movements that will be whipped up and manipulated if the interests of the wealthy are ever seriously challenged.

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Beware Greeks bearing ballot boxes

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Laocoon Photo: Marie-Lan Nguyen/Public domain

Whether you agree with the result or not, the massive No vote in Sunday’s Greek referendum was a courageous choice. Nobody knows what will happen now – not the Greeks, not the troika … not even Angela Merkel. The majority of Greeks chose to risk more economic hardship rather than willingly undergo further humiliation at the Eurobullies’ hands. A few observations:

  • The Greeks said no to do-as-I-say-not-as-I-do:  Jean-Claude Juncker and Christine Lagarde told them they were naughty not to have paid their taxes. He was finance minister and then prime minister of a tax haven from 1989 to 2013. Being employed by the IMF, she doesn’t pay taxes anywhere (as was, of course, also the case for her predecessor, the delightful DSK). I don’t think that any of us could swear, hand on heart, that we would insist on our contract being rewritten if offered tax exemption but why exactly do international pontificators on fiscal rigour have this status?
  • European unity is good … but at what price? I have to admit to a sentimental attachment to the European Union and the euro. Being able to travel across most of a continent without showing my passport or changing my money is a pleasing taste of a world without national borders. But how many Greeks should be made unemployed, have their pensions slashed or otherwise reduced to penury to afford me that pleasure?
  • Europe would look pretty stupid without Greece: Juncker and friends said that the Greeks were voting on whether to stay in the euro and maybe the EU. Grexit would be a big blow to the euro project but they may be ready to accept it for the sake of an example to the other southern European slackers. But what will become of all those speeches about Europe’s heritage and values if the country that gave us the words “democracy”, “philosophy” – not to mention “poliics”, “comedy” and “drama” – is no longer part of our Europe? What has Luxembourg’s contribution to our common culture been, remind me?
  • Opinion polls are crap: Thank God I resisted the temptation to write a headline about Yes and No being neck and neck on RFI’s website on Saturday following the last poll, which showed the Yes winning with 41.5% against 40.2% for the No.  This is not the first time the pollsters have been spectacularly wrong or that partisan media and interested parties have tried to influence the result by seizing on the prediction that serves their purpose. What happened? Were those canny Greeks also plotting their revenge on pollsters, journalists and EU chiefs by lying about their real intentions? Of course, even if the pollsters are genuinely trying to get it right, they can’t avoid the fact that being polled is passive and going to vote is active. They include in their calculations the responses of people who won’t be arsed to go and vote, whose opinion, quite rightly, isn’t taken into account in a real democratic process. But still we write articles based on one poll as if it was a factual account of the public’s mood and politicians allow their results to influence policy. I think we do have enough evidence to say that François Hollande is not very popular in France at the moment but can we really be sure that 51% of French people don’t think very highly of Alexis Tsipras on the basis of one poll?
  • This is the beginning of an era of austerity, not the end: Austerity doesn’t deliver what’s promised and depresses demand, thus further damaging the economy. But the IMF, the EU and the German leadership have turned down Yanis Varoufakis’s kind offer to save capitalism from itself. Electoral considerations come into this for Merkel, although, as George Papandreou showed when he resigned as Greek PM, an establishment politician is prepared to fall on his sword for the greater bourgeois good if bullied enough. Please read my previous post Austerity the new  normal on why I believe that the changes in the structure of the working class and the collapse of the Soviet bloc have lifted the restraints on unbridled capitalist accumulation and are likely to lead to all the social reforms of the 20th century being “reformed” away.
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Pursuing tax-dodgers , even half-heartedly, nets France 20bn euros for France

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Toads of property, George Grosz

As I’ve just reported in a much-tweeted story on RFI’s website, the French government collected a record 19.3bn euros from tax dodgers in 2014, up from 18bn in 2013, and it expects to collect even more in 2015.

The government is claiming the credit for its anti-tax-dodging drive but there were earlier reports of people in that department complaining that they were understaffed, particularly given the number of tax avoiders who have come forward following the Swissleaks and Luxleaks revelations, and could collect far more.

Panic seems to have seized certain members of the accumulating classes, inspiring an unprecedented outbreak of honesty.

Unless I’m mistaken, the Greek government’s proposal to chase up tax dodgers has been pretty much pooh-poohed by the EU, IMF and other negotiators, for whom making the poor suffer seems to be a matter of principle – see my post Austerity the new normal, which also goes into the French experience and ventures an explanation as to why this is going to carry on indefinitely.

The French government is by no means evangelical about pursuing tax avoidance. Many of its “Socialist” members are millionaires and one was found to have a secret Swiss bank account (and to have consorted with fascists at various points in his career).

Anyone tempted to soap the rope for benefits scroungers might like to know that pursuing social security fraud, including employers’ unpaid contributions, only netted the French government 852.6 million euros.

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