07/04/2016 BBC Business Live

This is Business Live from BBC News, with Ben Thompson

Evading versus avoiding - the fierce debate over

tax havens rages on, as governments around the world

investigate where the rich and powerful are hiding their money.

Live from London, that's our top story.

Well, income tax in Singapore is capped at just 20%.

And that's only for money earned in Singapore.

here is how markets are faring in the first half of trade. And we meet

the modern marks. This French economist tells us that uneven tax

regimes are to blame for the growing income inequality. He says Europe

should take in a million migrants a year.

Lots of messages from you already about the question of ethics.

We're starting with the big tax scandal that's hit

We've covered the fall out of the revelations

It's shone the spotlight on the role of tax havens and the practice

Singapore has been tipped to overtake Switzerland as the top

spot for the rich to open an offshore account,

And it's not just individuals - big international firms are rushing

to slash their tax bill by setting up in places like Singapore.

It's perfectly legal - but that doesn't mean

Well, income tax in Singapore is capped at just 20%.

And that's only for money earned in Singapore.

Income earned abroad is taxed at zero.

In Singapore, companies pay just 17% tax on their profits - and none

Now compare that to Australia, where the corporate tax rate

So it's easy to see why big firms from those countries channel

billions of dollars of earnings through their offices in Singapore.

As our Asia Business Correspondent, Karishma Vaswani,

Setting up an offshore account is perfectly legal. In fact, in some

parts of Asia, it is as easy as plugging some details into your

laptop. It will only take you a couple of hours.

But here so it gets complicated. There is a difference between tax

evasion and tax avoidance. Someone who has income to report and does

not reported, that illegal. But tax avoidance is different. If you found

a loophole in the tax system which takes advantage of provisions to

avoid paying tax, depending on the contrary that you are in, you may

not be doing anything illegal at all. But we are not talking just

about people. Companies do it too. Google, Apple, Microsoft, Rio Tinto,

all household names, and all have admitted recently to being under

audit by the Australian tax authorities for having their

services set up in Singapore. they say they are not doing anything

wrong and that Singapore is an important hub for them. But

Australia says if you make money in Australia, you should be paying

taxes there. Singapore says it takes a very serious view on tax evasion

and does not tolerate tax related crimes.

Hong Kong has chimed in as well. In fact, many Asian countries say they

have signed up to a commitment to

exchange more tax information with one

But frankly, it is all about who goes first. If one offshore

banking centre starts opening itself up to greater scrutiny, there is a

very good chance customers will flee, chasing

the next most secret place to stash the cash.

Alex Cobham is the Director of Research at the Tax Justice Network.

Can we just start by being as clear as we can on this? It is such an

important element to this story. Evasion is illegal, avoidance is

legal. That is right. What we see in a lot of the material that has

emerged in the Panama leeks is a set of cases where people have

deliberately hidden information. That almost always takes you into

evasion. When we talk about multinationals shifting their

profits around, by and large they are not hiding information, they are

not pretending one thing one another thing is the case. They are using

existing loopholes. Largely that falls under the heading of

avoidance. Is there much of a difference? At the moment the focus

is Panama. But we are looking at other financial centres. Is there a

difference between Panama, the British Virgin Islands, Delaware,

the Cayman Islands, Jersey etc? Each of these jurisdictions offers

different types of secrecy. But by and large they are competing in the

same place. You suggested that Singapore may overtake Switzerland.

That certainly looked like it was the case at a few years ago. But we

found that the United States, including Delaware and other states

competing very aggressively, including Wyoming and Nevada, seems

to be the biggest mover. It is the United States that has put a lot of

pressure on other jurisdictions to become more transparent, while at

the same time becoming, if anything, less transparent itself, providing

more opportunities for people from outside to use the United States

itself for evasion and other corrupt practices.

Alex, this is an issue of morals and ethics. As we touched on there, many

of these organisations are doing nothing illegal but they are still

reluctant for us to be able to shine a spotlight on their tax affairs,

because they are simply not acting ethically. That is the issue when it

comes to their customers. They want to be seeing to be doing the right

thing -- Maxine. Certainly true. For high street names there is a

reputational risk attached to be seen to be very aggressively tax

avoiding. What it is also the case that some avoidance behaviour does

actually shade towards the evasion. There is a spectrum rather than a

clear line. If you are not sure about your position, you are

interested in hiding it even if you think you are just on the right side

of the evasion of line. Alex, we do appreciate your insight. Thank you.

Let's bring you up-to-date with a story we touched on yesterday.

US drugs giant Pfizer has scrapped a planned merger

with Ireland's Allergan amid plans to change US tax laws.

The decision comes two days after the US Treasury announced

fresh plans to prevent what's known as tax inversion, where a US firm

buys a company in a country with a lower tax rate.

The Pfizer-Allergan deal, valued at $160bn, would have been

the biggest example of an inversion, as well as the biggest

Tata Steel will begin the formal process of selling its UK plants

He's been holding talks with Tata in Mumbai,

and said a number of parties had come forward, but only

named Liberty Steel, whose interest is already known.

German rival ThyssenKrupp and investment firm Grey-bull have

also been reported to be interested in acquiring parts of the business

The risk of a global economic slowdown was a key factor preventing

the US Federal Reserve from raising interest rates in March,

according to the minutes from the central bank's latest meeting.

Fed members feared a slowdown would make it difficult to reach

The US central bank raised rates in December, saying it expected

Let's look at the website. Let's look at M When you do the

domestic tally in the UK, you cover it a lot. M is an international

brand. But they have struggled. We see it as a good indicator of the

state of the high-street up and down the country. When Amadeus is doing

well, it suggests people are willing to go out

of their shopping. -- M When it is

not, it signals that changing shopping habits are affecting the

business. statement for the first three months

of the year. They were looking for better figures.

Food does really well. Clothing always struggles.

Laois has the details. Good to see you.

It has been a difficult three years for Samsung, battling with

competition, Apple, the Chinese rivals.

some market share, doing very well in the likes of

India? That is right. Samsung has focused his attention on emerging

markets as a way to move away from the reliance on smartphones.

They are releasing phones costing ?100 -- $100 or $200. We will have

to watch and wait and see if it works.

Their profits are doing better than expected. Analysts did not expect

the numbers that came out today. They expect operating profit to rise

by more than 10% to nearly $6 billion. The final numbers

arrived at the end of the month. These guidance numbers tend to

pretty much be quite accurate. because of a new phone. It is not

hugely different to their previous models.

seem to be doing well. Maybe because it was released earlier in the year.

There are no hopes that Samsung is bouncing back

from the decline in its mobile business. But overall I think some

analysts remain I'm going to rattle through the

markets. Asia bouncing back overnight. I want

to show you what is happening in Europe in the

first Havenaar. The markets looking generally more positive. They have

not been hugely affected by what we have

heard from the Panama papers. You may expect some

scrutiny. But not so. They have been obsessed

with other things. Including the failed Pfizer deal.

Richard Fletcher, the business editor of the Times joins us.

what then hinted at, highlighted. It is an interesting thing. The

papers occupying pretty much every news channel around the world.

The markets not really focused on that. But boy, they were all across

the Pfizer deal? Absolutely. 2015 was a fantastic year to be an

investment banker. There were $46 trillion worth of deals done. 2016

appears to be turning into a nightmare. Regulators are taking a

keen interest in some of these megadeals.

seeing a regulators and government is

We have seen tax inversions been very controversial in the US. We

have seen the crackdown there. We also saw yesterday Hali Burton,

an oil services company, buying its rival, Baker

Hughes. in a Delaware court. We have seen 18

deals this year so far in the US challenge by regulators.

We have seen European regulators be tough. These megadeals do seem to be

concerning governments. They are worried about companies

getting too big. That is affecting markets. Let's

look at Asia. The yen soaring against the dollar again. That is

hammering stocks, particularly in firms that export

around the world. Yes. We did have a positive end to Japan but only just.

consecutive runs of negative days. In the last couple of

haven, despite the huge debts in Japan.

That is pushing the yen up. That hits the stock prices.

We have not seen an intervention in Japan since 2011. But we are

starting to see those reports, sources

close to the Minister etc. They are getting more concerned.

Still to come, he has been described as one of the most influential

economists of modern times. Our business editor is sitting down

why he thinks global wealth inequality is getting worse.

You are with businesslike. The Co-op has been a fixture

of the High Street for 150 years offering everything from food

and insurance to funerals, but it's In 2013 they had their worst year

in their history, with losses of ?2.5 billion mainly caused

by problems at their bank. Since then to turn things

around they've sold off most of the Co-op Bank,

as well as their pharmacy chain and farms and refocused

on its convenience stores. This morning they announced pre-tax

profits of ?23 million for 2015. Chief executive Richard Pennycook

says the business is Although it is only year one of our

rebuild, we can already see great momentum. So just in the last three

weeks, we have been told that we are the fastest-growing of the big five

food retailers, and all of our businesses are responding very well

to the investment that we have been making. We are investing for growth

and for the further development of our businesses, and that is across

the piece. It was about 400 million last year with 900 million still to

come. Customers will have seen it. For example our fruit and veg was

15% lower priced last year than the year before. Our colleagues are

seeing it. We put through an 8.5% pay rise for 40,000 front-line

colleagues last year. And we are also investing right the way through

our infrastructure and our systems. Now we can go to the live page

because there are a lot of results out this morning, including those by

Marks Spencer. Described by one of our regular posters as less awful

this morning, falling again, but a similar picture. Clothing sales

doing reasonably well but not as good as food. Food tends to buck the

trend for M, but clothing is a problem area. Competition on the

High Street when it comes to rivals like Next and H, things affecting

the business on the High Street. Steve wrote describing it as a mixed

performance, he is a chief executive. It is what they had

before and what they have got now and of course it is all relative.

When we talk to the experts, it is the clothing. Is it just the

perception? They don't get the designers right? It is the speed of

getting it into the stores, getting the right fashion in. Exactly.

Our top story: Evading versus avoiding.

We've been assessing the fierce debate over tax havens

as governments around the world investigate where the rich

There is plenty of detail on that on the BBC website, related to the

Panorama investigation. Events this week have cast

the spotlight on how much tax is or isn't paid

by wealthy individuals. But what does it tell us

about the wider economy and the controversial issue

of wealth inequality? He's been dubbed the modern Marx

in reference to the socialist Thomas Piketty, the French

economist, came to fame when he published his book

Capital In The 21st Century. He's been described as one

of the most influential economists In the book, Piketty looks back

at decades of changes in how wealth is distributed and discusses

the outlook for global inequality. He claims that a current post-war

surge in inequality has been fuelled by capitalism

and he calls on governments to step in and rectify it by adopting

a global tax on wealth. Our economics editor Kamal Ahmed sat

down with Mr Piketty and discussed why the growth in inequality

is getting worse. I believe in private

property but I think we need We need more financial

transparency, more public knowledge about who is benefiting

from growth in order to adjust our policy, whether it is our tax

policy, social policy, our educational policies, so as to make

sure that growth doesn't only benefit a small group of the global

elite but benefits the middle class, Recent evidence from

the Institute for Fiscal Studies has suggested that

actually income inequality has If we take a longer

perspective, there is absolutely no doubt that there has

been rising inequality in Western If you compare the 1980s and 1970s

with today, 20 or 30 years on, there is no doubt that not

only in the US but also in the UK and in most developed countries

we have had rising inequality. Also if you were to look

at worsening wealth equality, you would

see a definite rise of consumption of property

in When you have the kind of real

estate prices you have in London it means that

access to property for a working family

with no initial family wealth is

extremely difficult. What do you think are

the economic threats now? Well, to me, the main

problem with rising inequality in the long run

that there is a risk that it leads to political instability, in some

I think when you don't manage to solve

your local, domestic inequality, your social problems, in a peaceful

manner, it is always tempting to blame others.

You can blame foreign workers, like the extreme right in

You can blame foreign countries, you can blame Europe in

some cases, and in France we like to blame Germany or China and in

The problem is that this is not going to solve the problem.

You look at the eurozone, Britain, America,

there are real concerns about the level of growth.

I think there has been too much austerity since the

There has been an attempt particularly in the eurozone to

When you look at the growth trajectory of Europe as compared to

the United States, I think it is very clear

that we have started a new

recession in 2011, 2012, 2013, which shall lead again to excessive

austerity and rising unemployment and xenophobia, right at the time

when there was a need for Europe to be more

rest of the world, in particular regarding the refugee crisis.

Thomas Piketty there. We asked at the start of the programme whether

tax havens were unethical or just a sign of global business. Lots of you

getting in touch. Alfie says purely unethical. Jordan says nothing wrong

if it is not illegal. Another one saying look at whether tax is paid

and if it is in the right place. If the rich are going to complain about

paying more tax, then they should all be paying it, not just avoiding

it around the world. Are you done? Richard is back and we want to go

through the papers. Let's talk about yours, the Times. The mobile phone

operator network, they are keeping the O2 bid alive. Tell us more. We

talked about people flexing their muscles. We'll adapt this deal which

would see Three buying O2, and there has been a lot of noise, and

Hutchison has given way and they are allowing rivals into their network.

The biggest foreign direct investor in the UK, and they own Superdrug

and lots of other things, they are upset about how this has been dealt

with in Europe, rather than by regulators here. They are very upset

and they have put some of their other investments under review,

future investments, because they are so upset about the hard time they

are being given to get this deal through. The Wall Street Journal.

Amazon struts fashion sense challenging traditional stores.

Interesting given what we have said about Marks Spencer already

struggling with clothing. Amazon is somewhere where you get things a bit

cheaper but they say with fashion they charge full price and there is

a good reason for that. Clothing retailers love to talk about price

architecture, where you protect your price. Look at the success of Next,

because they only have a sale at certain times and they know that

they will not go on sale early. Amazon has been making people know

this because they are known for discounting and they do not have a

feel of a luxury brand. We all use it, I use it, but there are other

retailers out there! But clothing retailers have been nervous about

what it does to their brand if they are seen as the lowest possible

price, displayed in the same way as everyone. But as ever, Amazon have

been courting them and they want to grow this part of their business.

When I read about the dot-com boom in 2000, people said they would

never sell clothing online, but look at the excessive online, Next and

even Marks Spencer. Do you think Amazon will crack it? I think they

will. I love Amazon. But there are other people as well! As you say.

Thank you for your company today. Have a great day wherever you are

watching us in the world. Goodbye. Good morning. Essentially we are

looking at another day of sunny spells and scattered showers, so I

suspect that there could be seen