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Wednesday
Jul032013

Beware, the Borderless Tax Man Cometh

Contributed by Don Quijones, a freelance writer and translator based in Barcelona, Spain. His blog, Raging Bull-Shit, is a modest attempt to challenge some of the wishful thinking and scrub away the lathers of soft soap peddled by our political and business leaders and their loyal mainstream media.

It’s no secret that the Spanish government is desperate for money these days. Like a junkie experiencing the early spasms of withdrawal, Rajoy’s administration has been frantically surveying its surroundings for anything of value to steal or pawn.

Last year it reneged on pretty much all its election pledges by unleashing the most severe austerity regime in the country’s democratic history, with 27 billion euros of cuts and a 7% rise in utility prices. Taxes were hiked across the board and, as in Greece, privatised hospitals and other public services were hastily fast-tracked into the pockets of multinational corporations. But all to no avail.

Despite its austerity drive, the government failed dismally in its attempts to meet the Troika’s 5.3 percent budget target for 2012, and by May this year had already given up on meeting the 2013 target. With time fast running out and the Troika’s goons breathing heavily down its neck, the government began frantically searching for new, more imaginative ways of raising funds.

And in January, 2013, it seemed that it had found the perfect answer – namely, to target the funds of expatriate residents and nationals living overseas. The government stealthily announced a new law that obligated any resident in Spain with more than 50,000 euros worth of savings, assets or real estate overseas to declare all of it – and with pin-point accuracy.

While the government insists that the new law is merely an information-gathering exercise, failure to declare or any errors in the information provided would result in a penalty of 10,000 euros, or more. Anyone who declared their assets after the deadline – April 30th – would have to pay a minimum fine of 1,500 euros.

With the prospect of a new, extremely desperate tax man on the scene, thousands of ex-pats are now [quite understandably] considering leaving Spain. 

One person who is wracked with worry is the retired Spanish-born father of a close friend of mine. After moving to London in the sixties, he has built his life in the U.K., where he owns the small house in which he and his wife have been living for the last 30 years. But he is also a regular visitor to his country of birth, where he officially remains a resident and owns a small property on the Costa Blanca.

Since he doesn’t travel in ex-pat circles, my friend’s father didn’t find out about the new legislation until it was already too late. 

“It’s horrible to see the stress this new law is causing my 74-year-old father,” says my friend, who, naturally, would prefer to remain anonymous. “A man who wants to do everything by the book and be 100 percent in compliance with the law. Because he wasn’t informed of this new requirement, and didn’t send his Modelo 720 in the short time window available, he now faces what seems to be unlimited fines whether he now sends in the form or not.”

Not only can years of hard work and saving seemingly be taken away in a flash, he is now living with this uncertainty hanging over his head, which I really hope will not have a negative effect on his health.”

Tax Collecting Goes Global

The Spanish case is testament to the ever-closer cooperation taking place between national tax authorities. For years now, the U.S. government has demanded that all overseas nationals declare their annual income. And starting in 2014 all banks in Britain will report directly to the IRS and vice versa.

Perhaps most ominous of all, the first four items on the declaration of the recent G-8 Meeting addressed the need for governments to share information to, quote/unquote, “fight the scourge of tax evasion.”

Which, let’s face it, would be all well and good if their primary targets were not the little men in the street like my friend’s father but rather the multinational corporations, banks and hedge funds that for years have been paying a pitiful fraction of the billions of euros of taxes they owe in the countries they operate. Call me cynical, but I find it somewhat hard to believe that the very same political leaders who casually and covertly meet up with the chief executives and chairmen of the world’s largest corporations in fora such as the annual Bilderberg meeting are about to throw their corporate owners partners overboard.

As Nicholas Shaxson writes in his book Treasure Islands, “The offshore system is the secret underpinning for the political and financial power of Wall Street today. It is the fortified refuge of Big Finance.”

There are, by his estimates, anywhere between 10 and 20 trillion dollars sitting offshore in tax havens and half of world trade, in one way or another, is processed through them. And it’s not just about paying less taxes. Tax havens also offer their clients secrecy and escape from both financial regulations and criminal laws.

Ironically, the host country of the recent G-8 Meeting, the U.K., and more specifically its financial capital, the City of London – which, it’s worth mentioning, is an entirely separate sovereign entity – is one of the world’s biggest offshore tax havens. By offering banks around the world the opportunity to skirt the democratic laws of the nations in which they operate, London has been an essential accomplice in the rise of the too-big-to-fail paradigm, not to mention the myriad financial crimes that have been committed in its name.

The Real Agenda

In the coming months and years, governments will try to propagate the idea that they have suddenly found religion. As if singing from the same hymn sheet, they will tell us that they now understand the importance of tackling the “scourge” of tax evasion and the illegal economy.

Many taxpayers will no doubt swallow the propaganda whole. As such, they will happily allow their governments to share all their personal financial information with other countries and regional or international bodies such as the EU, the IMF, the World Bank and the Bank of International Settlements. After all, it’s the least we can do in the war against tax evasion.

But just as Edward Snowden’s recent disclosures have shown that the NSA’s wire-tapping and Internet snooping is much more about social and political control than it is about fighting terrorism, our governments’ sharing of our private financial data will be geared at consolidating financial control over our lives.

In the U.S. Judicial Watch has just announced that it has obtained records from the Consumer Financial Protection Bureau (CFPB) revealing that the agency has spent millions of dollars for the warrantless collection and analysis of Americans’ financial transactions. The documents also reveal that CFPB contractors may be required to share the information with “additional government entities.”

By creating a global cross-reference of everything that moves in the financial world, governments will be able to track every penny we earn, spend or save. It’s no coincidence that the self-same governments have been implementing increasingly draconian measures to limit the use of cash in the economy while at the same time promoting the use of digital alternatives such as mobile money, which can be much more easily tracked and traced.

The war against privacy is being fought on a broad spectrum of fronts, chief among them the financial front. And what remains of our economic freedom, whether as earners, savers or spenders, hangs in the balance as the iron grip of government control tightens. For if information is power, then complete informational awareness of the kind our governments seek represents potentially the final stepping stone to absolute power. Contributed by Don Quijones.

Given the hunger of the tax man, and the financial fiascos, debacles, and nightmares everywhere, how do you protect your assets? There are no easy answers, but here is a place to start.... Diplomatic Immunity For Your Assets In Interesting Times!

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