Browse content similar to 07/04/2016. Check below for episodes and series from the same categories and more!
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