Friday, July 25, 2008

Peter Lowy Takes The Fifth

They are so bloody predictable, these immoral braggarts, aren't they? After complaining that their case has been pre-judged and telling everybody they want to explain their side of the story, the Lowy's get their day in front of the US Senate and... refuse to speak.
Peter Lowy's decision to take the Fifth means there is still no public account from the Lowys of why the files of the LGT Bank in Liechtenstein recorded a corporate trail involving two Liechtenstein foundations, a Swiss trust, an Australian trust, three Australian companies, two British Virgin Island companies, a US company and two Liechtenstein foundations to manage between $US54 million and $US68 million on the family's behalf from 1996 until 2001.
That's a pretty complicated way of giving money to charity, especially when donations to charities are tax-deductible under Australian law. Elisabeth Sexton in SMH today goes into a lot more detail on how the money was moved around.

And get this ATO response:
This week's submission from the Tax Office suggests that even if it manages to uncover the details of a Liechtenstein foundation, an Australian taxpayer might be in the clear.

"The ATO has encountered difficulties in applying Australian taxation laws to non-common law entities, such as Liechtenstein foundations," the submission said.

"These hybrid entities possess characteristics of both a common law trust and a corporation" - and therefore do not fall squarely within the rules intended to prevent taxpayers indefinitely deferring their tax.

"Until legislative or judicial clarification is provided on this issue, the ATO will continue to characterise these hybrid entities on a case by case basis," it said.
You see, corporations have more rights than individuals under ATO laws.

If you don't know what this is all about, see a movie called "The Corporation" (youtube part 1 below) which explains how millionaires over many decades have successfully lobbied politicians for more and more corporate power, so that their corporations were first treated like individuals under law, and then got even more rights. So now we ordinary taxpayers are really second-class citizens.

Adele Horin today has more on tax havens:
The Organisation for Economic Co-operation and Development lists 38 countries that are tax havens, and that's not even including Switzerland, Austria or Luxembourg, for heaven's sake, although their bank secrecy laws are pretty dependable. If you don't fancy a bank in the Cayman Islands, Jersey or the Isle of Man, there are plenty closer to home - Vanuatu, for example - that offer depositors anonymity and banking secrecy. A cluster of Pacific micro-states has leapt on board. Why sell bird droppings or sullenly watch your island sink into the ocean when you can make some money robbing other countries blind?...

Liechtenstein is not on every traveller's itinerary, but it is the supreme destination for tax tourists. The OECD classes it as one of the world's three "unco-operative" tax havens, absolutely steadfast and zealous in its passion for banking secrecy. The other recalcitrants are Andorra and Monaco...

Liechtenstein has more companies than citizens (35,000), is only twice the size of Manhattan island and has a crown prince who has a view of tax that would make Kerry Packer smile in his grave. He said recently: "We just don't behave like a nanny and ask people continuously, 'Have you paid your taxes?' "...

An analysis of tax dodging by the international charity Christian Aid published in May says the practice has become so popular and widespread that it is tantamount to "a new slavery".

It estimated more than 5 million children could be saved in the developing world if the super-rich and the world's biggest companies paid their fair share in tax.

It also estimated that governments in the poorest countries are being cheated out of at least $165 billion a year in tax revenues, much more than the World Bank estimates is needed to halve poverty by 2015.

The report, called Death and Taxes: the True Toll of Tax-dodging, says: "The inescapable fact is that there are only four reasons for banking 'offshore': to avoid tax, to evade tax, to function in secret, [and] to sidestep regulations controlling financial services or monopolistic practices. In each scenario, the pursuit of profit outweighs all other considerations, including good citizenship and social responsibility."
For all his high profile talk about feeding the world's poor, U2's lead singer Bono is one of those cited as a leading tax haven culprit. I guess he will be staying silent about that too.

Money talks, but those who have it don't.