04/10/2012

Night flights to nowhere

A rich person wishing, for tax reasons, not to be considered resident in Britain regularly slept overnight in his private jet. Each flight reduced his residence by 2 days!


20120410_donor_private_jet.JPGThis night flight fact was revealed by the "whistleblower", Sarah Southern, the former aide to David Cameron who was secretly filmed in Zurich advising undercover reporters posing as business people how to gain access to the prime minister. She mentioned that this person, who was an important donor to the British Conservative party, flew by helicopter to Luton airport, then slept overnight in his private jet as it did a round trip from Luton to nowhere and back. This was at the time when residency rules specified that the (two) days of travel to or from Britain did not count as residency days: the rules have now changed to be just where a person is at midnight, and the report suggested that this person's tax arrangements have now changed.

Unlike Switzerland, the list of donors of large amounts to political parties is available to the public. However, many of these are corporations, so one has to look behind the details. According to one report, the major donors come from the Financial Services sector, with two top ones being IGPL, the fiefdom of the Tory party treasurer, Michael Spencer, and Bearwood Corporate Services, the investment vehicle of the party's former deputy chairman Lord Ashcroft.

Lord Ashcroft was very much in the news when on 1 March 2010 it was stated that after 10 years of holding his tax status as private, he revealed that he did not pay tax on his overseas earnings in the UK. Not surprisingly, this was splashed all over the newspapers. Perhaps as a result of this very negative publicity he then changed his tax and residency status.

Lord Ashcroft is stated to be the owner of a private jet, a Dassault Falcon 7X with registration VP-BZE, via his Bermudan registered company, Flying Lion. With a capacity of up to 14 passengers and a range of up to 11,000 km, such an aircraft could easily have a comfortable bedroom and be able to fly overnight. It has also stated that he, and other super-rich people, will be given free carbon allowances to offset green tax on private jets.

It has just been announced that the Chancellor of the Exchequer, George Osborne, is shocked at the way that multi-millionaires are using aggressive tax avoidance schemes to reduce their income tax rate to an average of 10%; half that paid by the average person in Britain. In the USA, Mitt Romney has also admitted paying only at a rate of 15%, which has provided ammunition for President Obama in thne White House race. The Democrats hope to change this via legislation called the Buffet rule, named after billionaire businessman Warren Buffett, who has repeatedly spoken out against the unfairness that he pays a lower tax rate then that of his secretary.

In France, perhaps influenced by the presidential campaign, there is a proposition that French citizens resident abroad who benefit from low taxation in their country of residence may be made to pay to the French government the difference between the tax they pay and that which they would pay if they were resident in France.

And Switzerland, you may ask! Who remembers the Kopp affair, during and after which it came out that somehow, despite apparently being rich, he/they had no fortune on which to pay the Swiss tax on assets? Who also might not have absolute confidence in any measures to increase taxes on wealthy citizens (and corporations!) that might be proposed and voted upon in a parliament in which the donors and donations to political parties are kept entirely secret?

It being Easter, the most important religious festival of the Christian year, here is what St Matthew (25:29) had to say so long ago :-

For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath.

 

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