Nominees for Most Artful Tax Dodger
The corporate motto of the world‘s fourth-largest supermarket chain – ‘Every Little Helps’ – is applied with zest to minimizing its tax bills. A network of ‘offshore’ schemes set up by Tesco – which operates worldwide, including the Fresh n’ Easy chain in the US – is designed to reduce its tax liabilities. One such scheme uses subsidiaries registered in the Grand Duchy of Luxembourg, said to be accumulating $100 million a year free of corporation tax. Another has deposited $2 billion in the Swiss tax haven of Zug. The corporation claims: ‘Successful companies need to plan and manage their investments… in a responsible but efficient manner, in order to compete successfully on the world stage.’ The world stage netted Tesco profits of $5.5 billion in 2006/7 and $5.6 billion in 2007/8.
In four years prior to March 1999 Rupert Murdoch’s News Corporation paid just $250 million in corporation tax worldwide – a mere six per cent of its profits. At the time, corporation tax in its three main areas of operation - Australia, Britain and the US - was over 30 per cent. During the previous 11 years Newscorp Investments, Murdoch’s holding company in Britain, had paid no corporation tax at all, despite accumulated profits of $2.8 billion. His ‘financial engineering’ constructed a worldwide maze of about 60 News Corporation subsidiaries in tax havens such as the Cayman Islands, Bermuda and the British Virgin Islands. At the same time, Murdoch was encouraging parents in Britain to compensate for the lack of funds for public education by collecting tokens in his newspapers to buy school textbooks.
The British Monarchy
In 1992 the British Monarchy agreed for the first time to pay tax on its personal wealth. But no-one knows exactly how much that is, and the Queen isn’t telling. The private and the public are, in the case of the Monarchy, concocted into what amounts to tax-dodger heaven. It is left unclear who actually owns, say, the large royal collection of priceless drawings by Leonardo da Vinci. The Crown Estate, with assets valued at more than $14 billion, belongs to the Monarch, though its revenues go to the state. The Monarchy owns two large ‘private’ Duchies (Lancaster and Cornwall) and other estates which between them cover more than 100,000 hectares of land and come with castles and prime real estate thrown in. Death duties are not payable by the Monarchy. It receives some $80 million a year from the taxpayer to cover its burdensome official duties, and is demanding more.
Irish minstrel and anti-poverty campaigner Bono joined the band of celebrity tax dodgers (which includes the Rolling Stones) in 2006, when it was revealed that U2 had moved its royalty income from Ireland to the Netherlands. For many years Ireland had famously – and much to the benefit of U2 – not taxed the income of ‘artists’. Then the Government decided to set a cap of $200,000 a year – a fortune for most artists, but not for U2. Ireland is itself a corporate tax haven and Bono would have done well enough had he decided to stay put. But the Netherlands offered a more competitive deal, partly through its link with the Antilles. Another band member, The Edge, pleaded: ‘Who doesn’t want to be tax efficient?’
In 2005 one of the giant ‘Big Four’ international accountancy firms, KPMG, admitted criminal tax fraud and agreed to pay $456 million in penalties. Between 1996 and 2003 it sold transactions that created $12 billion in sham losses and cost the US Treasury $2.5 billion in unpaid tax. BLIPS – ‘bond-linked issue premium structures’ – were bought by 186 wealthy individuals and generated some $5 billion in tax losses. FLIP and OPIS, two other financial instruments, involved no-risk investment swaps through the Cayman Islands, a well-known tax haven. KPMG was not alone. The ‘alphabet soup’ of tax dodges was closely related to the ‘financial instruments’ that created the ‘credit crunch’ in August 2007.
Already a successful ‘condominium broker’ in New York, Leona married real-estate magnate Harry Helmsley and thereby became the owner of a chain of hotels and the Empire State Building. In 1988 Harry and Leona were indicted by US Attorney Rudy Giuliani on tax charges related to the refurbishment of a luxurious weekend retreat. Harry’s health had deteriorated so much during his marriage to Leona that he escaped the courtroom - but died shortly afterwards. Leona did not. During the trial Elizabeth Baum, a former housekeeper, testified that she had once commented to Leona that she ‘must pay a lot of taxes’. ‘We don’t pay taxes,’ Leona had replied. ‘Only the little people pay taxes.’ Leona became known as ‘The Queen of Mean’. She was sentenced to 16 years, though she served just 18 months in a federal jail. She died in 2007. Her $4 billion estate left $12 million to her Maltese dog, Trouble.