Christ on a bike but this tax scandal is depressing. At its most basic, the story (as it actually affects British politics) is this:
- A global law firm had its confidential client documents stolen and circulated to the world's media (this is a Good Thing, because everyone hates secrecy when other people are doing it).
- Quite a lot of these documents were about setting up companies in low-tax jurisdictions.
- One of these companies was an investment vehicle established by David Cameron's father.
- David Cameron invested in this fund.
Everyone proceeded to go barking mad.
Let's just see if we can unpick all this and find out whether there's actually any wrongdoing, legal or moral, about all this - starting with Ian Cameron.
It's a collective investment fund, that distributes all returns to investors annually. It would have been based in the Bahamas both because it was an advantage to be in the dollar area, and because no local taxes were levied, avoiding double taxation for investors. Investors in these funds (provided they declared their income) would have not avoided any UK taxation - in fact, by increasing the returns to investors, Blairmore would have increased the amount of tax paid. There's a fabulously daft headline
in the Guardian
Fund run by David Cameron’s father avoided paying tax in Britain
Which is because "Fund run by David Cameron's father" wasn't in Britain. It's like complaining that a French bakery in Lilles avoids paying tax in Britain. This also makes comments by Jess Phillips
that "David Cameron's dad didn't pay his fair share of taxes" stupid at best, and malicious lies at worst.
David Cameron hasn't avoided any tax
Which leads us to the next point. Cameron paid all the tax that was due on his investment in Blairmore - i.e. UK income tax on the dividends he received, and UK Capital Gains Tax when he disinvested. Since the purpose of Blairmore was to increase the income of its investors, a side effect was to increase their tax bill. There is simply not any avoidance going on here.
But wait! What about inheritance tax?
This is a doozy. Once Cameron had opted for the "full disclosure" route, and told everyone about his finances, it was noted that his mother had given him £200k shortly after his father's death. This was described in the Mail on Sunday as a "tax bill dodge
" on the grounds that unless she dies in the next couple of years, Cameron won't pay tax. This is less a "dodge" than "how the entire fucking IHT system works
". What you're left with is "David Cameron is considerably richer than yow", which I suspect most people knew a while back.
So the story is that the Prime Minister invested a relatively small amount of money into an investment fund, and paid all the tax that was due as a result. Which doesn't sound to me like Watergate - or a reason to arrange a demonstration calling for his resignation
. The journalist who organised the demonstration has a quick response if challenged on why a Prime Minister who has manifestly not evaded tax, and actually not even avoided it, is this:
Saying, in other words, that the "real scandal" is that back in 2014 Cameron "personally interfered to protect offshore trusts from EU tax crackdown
" which becomes:
Jesus, that sounds bad!
Doesn't it? It basically comes from this FT article
, which claims:
David Cameron’s EU intervention on trusts set up tax loophole
From this Abi Wilkinson got the message that Cameron had personally lobbied the EU to "protect offshore trusts from EU tax crackdown", and that this intervention was a barrier to EU action against tax havens.
The only problem with this interpretation is that its nonsense. What we're talking about is the proposed Fourth Money Laundering Directive
, that was introduced last year and was widely consulted on beforehand. One of the proposals was that, as well as a publicly available register of corporate beneficial ownership (i.e. who really owns what), there should also be a publicly available register of all trusts.
Trusts are very uncommon in civil code law jurisdictions, and are basically assumed by most Europeans to be nothing more than a vehicle for nefarious financial schemes (hence the Austrian finance minister calling the UK "the island of the blessed for tax evasion and money laundering" and specifically citing trusts in support). In the UK, however, trusts are pretty common, and most are used for family money management, especially in probate (where inheritances more complicated than "it all goes to my only child" require a trust structure in order to work). It is, in other words, another example of the incompatibility of common law and code law systems.
Anyway, Abi makes 4 specific claims. That Cameron personally lobbied the EU; that it was about offshore trusts; that it was a tax crackdown; and that it prevented action against tax havens.
Was it personal? Well, kinda. Cameron wrote a letter to the President of the European Council in his capacity as leader of the UK Government
, setting out the position of the UK Government. I don't really see that as "personal lobbying" but it's not exactly wrong to do so.
Offshore trusts? Well no. The thing about offshore trusts is that they're based offshore. The thing about a proposed Register of EU Trusts is that it applies to trusts registered in the EU. The one isn't affected, remotely, by the other.
Was it a tax crackdown? It was billed as a money laundering crackdown and looks more like a privacy crackdown. And what was the intention of British lobbying
in this respect?
As a compromise, the UK government intends to get the Fourth Money Laundering Directive obligations restricted to trusts that hold financial assets – which would specifically exclude, for example, will trusts. 'We want to ensure that, as far as possible, information about trusts that could be problematic for money-laundering purposes will be more generally available,' said Newby. 'Our proposals would do that in respect of the UK without having a full mandatory register in the same way as we propose for companies.'
And did it prevent action against tax havens? No. How could it? What's the link?
And the moral of the story is...
People know naff all about finance or law. But they sure do hate rich people.