Original subtitles

(Narrator): Throughout the world, inequality is

soaring to new heights.

And the wealth of nations that once provided prosperity

for the majority, has gone missing.

This is the story of powerful forces deepening the divide

between the few and the many.

-Does Apple Inc. own directly or indirectly AOI, AOE and ASI.

-Yes, Apple Inc. owns directly or indirectly AOI, AOE and ASI.

-AOI is incorporated in Ireland, is that correct?

-Yes, Mister Chairman, it is incorporated in Ireland.

-And where is AOI a tax resident?

-It does not have a tax residency.

-We tend to imagine that the fiscal state has existed

forever. We look at a political map in particular, we see

those flat areas of color with little black lines around them,

that's Britain or that's France and we think that's existed

for all time. And that linked to that territory is an economy

and that's the fiscal state. Within that territory,

we raise taxes, we distribute welfare, and we understand

how that works. But of course it hasn't existed for all time.

There was a period before we had a welfare state, we had

the welfare state under a certain set of conditions

and those conditions have changed.

-For me, the history of the liberal state is

the history of the middle class.

You see, the middle class and those prosperous working classes

that become this modest middle class, they were

the big winners. It was their state. The elites didn't

really need it, they needed a bit, they used it a bit.

This was another world then and it was really a different epoch.

The golden decades of the liberal state which is

also the welfare state, I think they're gone, they're finished.

This liberal state is in decay. So here are these middle classes

revolting. The sons and daughters really, it's like

a forth of fifth generation after World War II, which

suddenly finds the social contract is broken.

-Until our study in 2012, there was no systematic

estimate for the size and growth of private wealth held through

offshore havens.

The global total was astronomical.

It was 21 to 32 trillion as of year-end 2010.

And it has continued to grow since then.

We are talking about 10 to 15% of the world's financial

wealth basically being invested offshore, beyond the reach

of tax authorities.

-Tax Justice Network is, and I mean I know the guys

who run it, they're fascinating people, I think they're

misguided, but they are fascinating and they're very

well intentioned in terms of they really believe

in this stuff.

But they're not, Tax Justice Network, doesn't have a huge

staff of trained economists like the OECD or the IMF.

-I put the question to former deputy director of the IMF,

just last year you've got 3000 economists between the World

Bank and the IMF. I can't find any literature on tax havens.

Why is that? He said: "You know, it's very simple. Several

of the most important tax havens are our members."

-To understand the relationship between the City of London

and the metropolis of London, you need to understand

a little bit of the history.

When William the First came to Britain from Normandy,

the French King, to conquer the rest of the country,

he stopped at the gate of the City of London.

He never finished the job. The French never finished

the job. And the city maintained the rights and privileges

that had existed in King Edward's day.

-Many of the things the Monarch gave was protectiveness,

so we could restrict trade to the level we wanted to.

I mean today, you would actually probably be in a court defending

it as a cartel or something, but that was the way it was.

We own all the bridges across the Thames over the years

from taking tolls over the bridges. We've built

quite a substantial amount of money, which we use

for the benefit of the nation. But one of the primary is

to protect, promote London's financial services

on a global basis.

-The Square Mile of the City of London retains all the

ancient rights and privileges and resources of the ancient

City of London. And the people who live outside the Square

Mile, those 8 million of which I am one, don't share

in those resources, although we are citizens of London.

-So this is the city. We use this for planning and showing

and it's interactive, you can find out where you want to be.

We own about 25% of the city, the corporation. But as I say,

there's now more foreign investors that own the city,

than domestic.

-And what you have today, you have this institution

that promotes the single interest of finance capital.

It's using this huge network of resources to promote

the single issue of finance capital.

It's a travesty of its history.

-We do produce an awful lot of money. What's good for the city

is good, good for the country, providing that that money is

earned fairly and squarely and doesn't jeopardize

the wealth of the nation, which it has done. So, you know.

(protesters)

Nobody in my view had the right to pitch a tent on a public

highway and stay there and decide and tell the authorities

when they might wish to leave.

I went there because at that time, I felt there was nobody

putting out the case. They wanted to abolish

the City Corporation and everything else. I thought

I'll go there and I'll try and have a debate.

The financial services industry, it produces about 65 billion

in taxes, 35 billion in overseas surplus. It's been very

successful because apart from anything else, many

of the other industries of course, that used to be very

successful in Britain have withered away. And I don't

make any apologies for being successful. I don't make any

apologies of being number 1 in the world.

-So far from being a success story, I regard the City

of London as the world's biggest tax haven, attracting billions,

hundreds of billions of dollars of wealth out of Africa, out

of Asia, out of Latin America, out of Europe, out of Greece,

out of Italy, to where it's misused by the City of London.

Stuart, I'd would welcome it if quite a few of our bankers

left as quickly as possible.

(screams and applause)

-More or less a half of the whole global offshore

system is in some way British, particularly the Crown

dependencies and overseas territories. And these are

in a sense fragments of the British Empire.

After the Second World War particularly, you had a very

rapid phase of decolonization. The British Empire effectively

collapsed. And just at that moment, you had the birth

of a new market in London, the so-called Euro markets

or Euro dollar markets, which was essentially an unregulated

market for dollars.

-When the Bank of England made a decision to allow dollars

to be traded outside of the Federal Reserve,

because of a quirk of British law, it didn't have to define

where it was to be traded. All that mattered was that

it was no longer to be traded through New York banking

system. But not defining where trade was to take place,

effectively, it meant that the trades were taking place

depending on how you understand it anywhere or nowhere.

-The Bank of England basically deemed this transaction as if

it all takes place in London.

It seems they don't take place in London, then London doesn't

regulate this transaction.

But then nobody else can regulate this transaction

because they actually take place in London.

The result is they created an offshore market, which is

unregulated.

By the 1960's, the large American banks grasped and began

to understand that actually by operating through London,

they can avoid all sorts of regulations and the market

exploded.

The poor Canadian banks also wanted to take advantage

of London, but London's expensive. And somebody hit

on the idea. I don't know whom, but somebody in the Bank

of Nova Scotia from what I understand, he hit on the idea

that in fact because Cayman Island is part of the,

is a dependency of British state, it's subject to the same

law as London.

-It has been said by an English jurist that it's the right

of every Englishman to so arrange his affairs

that the tax department doesn't put the largest possible

shovel into his storage. I agree with that, and

in Calgary, I was fortunate enough that the income tax

I was paying exceeded 50%, I was working very hard, long hours,

I wasn't seeing my family, and I just essentially refused

to pay more than half of my income to government

and so I started looking for someplace else.

There's nothing to my mind improper, immoral or anything

else about establishing a tax haven. I don't feel any

remorse about not paying taxes. I think it's a marvellous

way of life.

-The Bahamas started life as a UK OFC, but it became

independent in the 1970's. Bermuda is still an overseas

territory, the Cayman Islands, the British Virgin Islands,

Jersey, the Isle of Man, Guernsey.

-So you had this kind of two stage replacement

for the Empire, the city was suddenly reinvigorated and

started growing very fast again. And all these countries

that are decolonized as well as many others, because they still

looked to the mother country for sort of the rule of law

and you know, financial trading. The money started coming

back through the system, through the city, through the Euro

markets and through the tax havens and that mixed up

with money from presidents and their families and their

cronies looting their countries and all that money washed

into the system and all the players in the system very

quickly realized that you know, the more questions we ask

about the origin of this money, the less money we're going

to get. So very quickly this mentality developed.

This "ask no questions" mentality, we're just

like the money.

-And what that means is that money effectively crosses

the border in one direction only. It leaves the country

that issued it, the country that guarantees it and it enters

this global financial space, the space of money. It isn't

a real space, you can't visit it, we can't get on a bus

and go there, but your money can. And your money can travel

the world through these markets without landing anywhere.

And it can do so in perpetuity, should you so wish.

And so the space of money is quite hard to conceive

of a space of money. Imagine it would be like cloud

computing. We call it the cloud, because we think of it

as hovering above us and carrying all our data

in a way that's quite comfortable, we kind of like

the idea of the cloud. Offshore finance created

cloud money long before we had cloud computing.

Offshore is about leaving legal space and so for that reason,

offshore resides on the other side of the map as it were,

you penetrate through the map into this rather undefined

domain that we call offshore, we use it's familiar

topographical language as though it was simply somewhere else

on the surface of the earth. But of course, it's somewhere else

legally, somewhere else fiscally.

-When Hurricane Ivan hit the Cayman Islands, I think

the most noticeable thing that happened was that a few

light aircrafts lefts the islands beforehand with computer

hard drives on them.

-So effectively, Cayman Islands can be destroyed by a hurricane,

in fact, Cayman Islands can be submerged under the sea,

and can remain the forth largest financial centre in the world.

-There are 1.6 trillion dollars booked to Cayman Islands banks.

Almost none of that is actually in Cayman or invested in Cayman

or in a chest on the beach. That money flows mostly

between banks or between major corporations and is reinvested

somewhere else.

-Nothing real is really happening in these places.

You don't get very much real management of, you know,

hedge funds. The real people who are doing real stuff are

in New York or London or Paris or wherever.

-And the famous joke in London goes as follows:

'Those who know don't talk about these things.

Those who talk, don't know'.

I got a job working for what is now Deloitte Touche in their

offshore operations and the next step was one day in my office,

the phone went and there was a company acting on behalf

of the government of Jersey. They said: You're an economist,

and the government wants an economic adviser. Are you

interested in applying for the job?' And there I was,

an insider in a very prominent European tax haven.

Which meant that I have a very, very good position to start

finding out what the UK's position was on its Crown

dependencies. The British government connived at every

single step in supporting its offshore tax havens like

Jersey and the Cayman Islands and so on. Far from wanting

to take action. And they were under pressure from the European

Union or from the United States. They would talk the talk

about 'yeah, we do what we can'. But they never really took any

effective action.

-So it allowed the enormous growth of financial capital

and that in the end had the result of you know,

you had the Americans for example saying all

this activity is happening in London, there's nothing

we can really do to stop it. What do we do now? We're being

undermined here, do we, you know, if we can't beat them,

maybe we should join them.

Politicians felt they had to somehow compete with

this unregulated market by relaxing their own regulations.

-Politicians began to change the discourse, the language.

It was no longer about spiritual growth, education and so on

and so forth, being part of the group, but it's about

providing economic growth. The role of the state became

to become more competitive with the world markets.

It became the competition state.

And so, states had to respond by compromising with

the corporation basically providing them sweeteners,

subsidies, lower taxation, but at the same time providing

them with highly educated workforce with political

stability.

-I think the problem is that many politicians have

an illusion about how they actually run their country.

When actually they run their country within the confines

of what the global financial system places on them.

So if you want to take action on the UK economy,

if M Carney comes in and he wants to spend a fortune

of money, he'll find that the international financiers

will look at him and say: 'You're not'. Otherwise,

you're going to sell all of your government bonds.

-For me, this so-called competitive dynamic is

perhaps the most important reason why we have seen

the dismantling of the welfare state. Cutting taxes on the most

mobile forms of income, which means raising taxes on less

mobile forms of income, which tends to represent workers

and poorer people. And you know, making it much harder

for the welfare state to function and one of the great

reasons for the huge rise in inequality that we've seen

in the world today, particularly at the very top of the income

scale.

-We must alter our course, the taxing power of government

must be used to provide revenues for legitimate government

purposes, it must not be used to regulate the economy

or bring about social change.

(applause)

-It begins to happen in the 1980's. It's that

transformation that comes with the globalizing, the opening up

the possibility of offshoring. So that instead of having

a protected economy that allowed all the system to work

in a certain direction. Now, and ironically of course,

partly because of the victories of syndicalism in many

of these countries and the claims, the successful claims

of modest middle class people in bureaucracies who have health

insurance, to have retirement funds, to have housing

subventions, to have public transport, public education,

a lot of public services. Because that succeeded so well,

I think the onslaught that begins in the 1980's,

on all those costs, as they were called, is so brutal.

The state collaborated, the corporate actors worked hard

at it. So it was an actively made destruction of those

circuits that the state had to use to bring back to the mass

of the people some benefits from the taxes that they paid.

-We can go back to the Thatcher era in Britain. Government

spending grew very rapidly in the governments before

Mrs Thatcher from World War II and the British economy

stagnated and was getting a bit...Rich were getting

poorer and poorer.

Mrs Thatcher understood the problem. The same thing happened

here in America under Ronald Reagan, a lot of other countries

around the world. Things were privatized, governments were

cut back with great results.

-Would you say that one of the ways companies meet their

obligations to society is through payment of tax,

yes or no? -I think payment of tax

is an important responsability of businesses, yes.

-Could you tell me how many subsidiary companies your group

uses and has incorporated in the Isle of Man?

-I don't have that number with me. I'd be happy to look into

it and... -Well according to the return

that your group company put in last year, you have 30

subsidiaries operating in that jurisdiction. Can you tell me

how many subsidiary companies you have operating in Jersey?

-I don't have that number with me either.

-The number is 38. Can you tell me how many subsidiary companies

of your group are incorporated and operating in the Cayman

Islands? -The same answer.

-You have 181. Now of course all of these are well-known

tax havens, which are used by companies and a cursory

reading of your group returns shows that you have over

300 such companies operating in tax haven jurisdictions

around the world. You will understand M Diamond,

that there is obviously, I mean if you look at the facts

I've just presented, that would suggest that your bank is

engaged on tax avoidance, on a grand scale, would you not?

-Well I don't know what you... I think tax evasion is a very

clear phrase and it's a space we would never...

-I know. And I didn't use the word.

-And I chose the word tax efficiency which is our

obligation. And it's something that is in line with government

policy. -Your efficiency may be

our avoidance.

Those corporations have brilliant lawyers, brilliant

accountants why bother with being illegal, like your average

little household might be illegally avoiding paying

certain tax. Why bother with illegality? You can navigate

that regulatory fracture as I call it, that space in between

legal and illegal.

-Here's the situation: you've got an agreement which shifts

the economic rights into the most valuable thing

you have to 3 Irish companies that pay no taxes, you point

out and accurately so, Mr Cook, that 95% of the creativity

that goes into those products is in California. But two thirds

of the profits are in Ireland and you've made a decision

which you have a right to do, not to bring that money home.

-Senator, we're proud that all of our R and D or the vast

majority of it is in the United States.

-I know, but about 70% of the profits worldwide now

end up with those three Irish corporations. That's the facts.

-The sort of headline that Ireland has got this 12.5%

tax rate, but that's not really where the offshore action is.

I mean that's significant for sure, but what Ireland does

is it allows multinationals, it deems only a very small

amount of the profits that they make there to be taxable.

The Double Irish is part of the whole transfer pricing

game. It is a way of, one of the names given to one

of the techniques for disregarding large amounts

of income and only taxing small proportion of that.

-That's my take on the Double Irish here. I might do something

like mix a Guinness with a champagne.

-Half shot of Baileys, half shot of whiskey.

This is possibly a drink that may curdle, that's why

you have to drink it fast.

-A shot of Malibu followed by a shot of Jameson...

-There's your Double Irish.

-A shot of Malibu, a shot of Jameson, all the way down

to the Caribbean and back to Dublin. That's a Double Irish

for you. -So I taste it to see what it's

like.

Tastes like a gone-off Guinness.

-So the likes of Microsoft, Google and these other big

companies, corporate companies, I believe they do pay taxes.

They pay taxes through their employees. So their employees

are paying taxes into the country. And it's also

on a positive note, it's keeping people upbeat, it's keeping

people in work and it's saving a lot of people from being

on the social welfare.

-It's a double-edged sword, like for the people that I know

that work for them, they're providing them with employment

so it comes to whether you're thinking of, you know,

you and your little unit are the greater consciousness

of people out there. If the option is be a part of it,

and feed your kids and you know pay your mortgage or you know,

take the moral high ground. I don't know too many people

who can afford to take the moral high ground.

-I think the corporations come into Ireland to avoid paying

massive taxes just kind of a showcase of how short-sighted

government is here.

Everything has been just like make money now, don't think

about the future. And that's been the scenario even through

the Celtic Tiger in Ireland when it was doing really well,

people didn't invest money in services. I mean you look at

the state of the roads here, the most basic thing and there's

potholes everywhere and you can just tell that there's been

so much corruption with how the money's being spent and

people pay really high taxes here. Personally, like

property taxes are introducing water tax, all these new taxes,

personal taxes.

-You can probably see why maybe the bigger companies are

coming to this country because the tax for them isn't as high,

so our multi million dollar companies that are making

millions aren't getting taxed as much whereas the kind of people

that have the lower income or the average income are just,

taxes have gone through the roof.

-These companies as soon as a tax is introduced,

like they're not committed to Ireland, they'll be gone.

And the politicians know that and they're playing that gamble

but it's really destroying the economy here I think.

And it's setting a really bad example to people that

you know, oh if you provide jobs, you can just get away

with whatever you want. So...

-Many studies have shown that when countries offer

tax competition as a way to attract jobs, companies will

take advantage of the subsidies that the countries provide.

And when another country offers a different subsidy, they will

pack up and move to those countries.

The real jobs that this tax competition creates in my view,

are jobs for tax lawyers and tax accountants.

When multinational companies have subsidiaries in many

different countries in all the world, as you know, anything

that can be priced can also be mispriced.

But let's take agriculture as an example. Let's say

bananas. Now many of the plantations in Guatemala are

owned by the big fruit companies in the world, Del Monte

and Chiquita, they have plantations in Guatemala,

it's sold at a very low price to a company in the Cayman Islands.

So what happens is the plant is grown, the fruit is grown

in Guatemala, the revenue that the government of Guatemala

collects is minimal. The actual profit sits when the fruit is

sold to Cayman Islands from where it is resold

to Europe and the United States.

In the course of our study in Guatemala, we found that

as a result of this trade mispricing, Guatemala was losing

about 500 million dollars a year through this underpricing

of a exports and over pricing of imports, 500 million dollars

a year in a country that is still poor. And as we got into

more studies in this area, we calculated that developing

countries as a whole were losing about 200 billion dollars

a year.

You know the comment that was made by Joseph Andrews

who is the head of the transfer pricing of the OECD, he made

a very interesting, very revealing comment in February

when he said that there's something wrong with the global

trading system if 75% of the profits of multinational

companies are deemed to be earned in 4 tax haven

countries: Switzerland, Singapore, Bermuda

and Cayman Islands.

-Now Amazon... I buy a book from you, I do it actually online.

I'm a regular buyer and when I buy a book, what I do is

I get Amzon.co.uk. That's what I'm told. Is that correct?

I mean I can show you plenty... In fact I think you write to me

everyday with new offers. (laughs)

But it's a UK company that I'm buying from?

-No you're purchasing from a single European company.

We operate a single European... -I'm buying...It says to me,

I'll show it to you, it says Amazon.co.uk. Is that actually

to lie to me about the origins of your company?

-Now we're running a single European business.

-That comes with a UK. I believe I'm dealing with a UK company.

When did any book that I ever purchased ever get

to Luxemburg?

-So we do not have a...

-Have you got folks in Luxemburg?

-We do not have a performance center in Luxemburg.

We have a European headquarters in Luxemburg.

-When Chair buys her book, the money comes to Luxemburg

and you just essentially pay a small amount back to the UK

to have it delivered. Is that so?

-Service such as operating the fulfilment centers,

which is going to be receiving inventory, picking, packing,

and then passing on those products.

-How much of your Luxemburg business is sales into the UK?

-Fortunately, we've never broken out figures, revenue figures,

on a country website basis.

-You've got to be joking. -I, I give...

-You can't be serious.

-We operate a pan-European business. Those are the only,

only figures we have ever broken out with...

-I used to be a finance director of a pan-European business

and if somebody told me what, or asked me, what do you sell

in each country? I'd be fired immediately if I didn't have

the answer to that question. That's ridiculous!

-The numbers that we've never disclosed publicly.

-Will you disclose them privately?

-I am very happy, should the committee wish,

to come back and see whether it's possible to disclose

them privately to the committee.

-Like any company, we're required to do two things:

one, to play by the rules and when you set up internationally

you need to make decisions about how to protect your

international property and how to organize. And secondly,

to manage our cost efficiently in order to satisfy our

shareholders and our goal as a company is to...

-So you're minimizing your tax even though it's unfair

to British taxpayers?

-It's not unfair to British taxpayers. We pay all the tax

you require us to pay in the UK. We paid 6 million of tax last...

-Yeah, maybe. But we're not accusing you of being illegal,

we are accusing you of being immoral.

-The fair share argument I think is a really, really difficult

one to run particularly for someone from a legal

background and it's sort of the buzzword. Apple isn't paying

its fair share, or Starbucks isn't paying its fair share.

And OFC's are not the villains in that debate. The debate is

if you think the domestic US tax structure is wrong, and that

Apple should be paying US tax on the 150 billion it has

outside the US, change domestic US tax laws to have that happen.

-Unless we deal with the global as such, we're not going

to really address this problem anywhere nearly as effectively

as we need to and all the players in this industry are

basically organized across boarders. If you look at Apple,

and Google and Microsoft and Facebook and big pharmaceutical

companies, the multinationals, the grain companies that are

using their tax lawyers and their accounting firms,

to park assets and low tax jurisdictions. You know they're

playing this game across boarders. I think we have

to organize effectively around these global industries

the same way.

-The offshore world is full of vibrant, intelligent

and creative people. They are used to adapting to thrive

and survive. And they will continue to do that.

There is no doom or gloom Conversely, everybody I've met

appears to be optimistic.

-If we are now talking about tax avoidance being bad,

that is a significant shift in the nature of the playing

field.

The particularly active players are of course the OECD in terms

of the tax field and the current head of the tax division who's

a Frenchman, needless to say, called Pascal Saint-Amans,

who by the way doesn't pay any tax on his OECD salary.

But people get tired of me saying that. He gave

a fascinating speech at the site, Oxford University

business School in the middle of April, in wonderful Gallic

fashion, he had three, three days of beard and it was

wonderful, a silver fox.

-And he basically said: yeah, we recognize this is

an opportunity for the OECD to take back control of global

tax policy.

-And in today's commercial world, the way that's

accomplished is by creating intellectual property, this is

patents and copyrights and the like, and then placing those

pieces of intellectual property in the offshore world and

then billing the onshore companies for the use

of what has been patented or copyrighted.

So for example, the name Starbucks might be a copyrighted

and a trademarked and now, the trademark is sold to some

offshore shell company, and everywhere in the world, there's

a Starbucks, they'll pay for the use of the name.

But that moves the profit to a place where there's no tax.

-Are we helping developed nations or are we helping

emerging nations and attempting to reduce or alleviate

poverty? Or are we actually maintaining financial

imperialism? And I'm afraid, I tend to the former,

not the latter.

-Within the OECD membership, there are going to be some

countries that will do everything possible

to prevent them moving forward to what should be the logical

outcome, which is to move towards taxing companies,

not on the basis of the legal fictions they create

in the Cayman Islands and the Channel Islands, but

on the basis of where their genuine economic activity

takes place.

-Do you tax corporations as if they were a collection

of separate entities and loosely interacting with each other?

And you know, when they put those entities in different

tax havens and jurisdictions around the world, do you accept

those, the legal form of the corporation as the basis

for taxing them. Or do you take a completely different

philosophical view of what multinational corporation is

and treated as a single global unit and then you decide where

it's doing business, where its real businesses is, its sales,

its payroll and so on. Where is the real business of that

corporation and then you allocate its global profits

to each jurisdiction you divide it up to each jurisdiction,

according to the real economic substance of what they're doing.

If you do it that way, then you can completely ignore

what the tax havens are doing. They can do whatever they like

in tax havens, but if there's no real economic activity,

they will get allocated a tiny proportion of the global income.

It doesn't matter if they tax that at 0%.

-What's different about Google versus the other businesses

you've been talking about were not selling books,

and were not making coffee... -Just setting out the choices.

-Well the services we provide to consumers are based

on the computer science. That is what creates

the economic value for people. -What does Bermuda create?

-What's happening with the internet, the basic internet

was like that, but what's happens with it recently,

with the event of the advertising business model

and cloud computing and the way that everybody gives their data

over to remote companies, it's as if you got your truck

on the freeway and then the freeway supplied people

who would recommend the route and would decide which trucks

stop you would be aware of.

The highway system is generous. Obviously we pay for it

with our taxes, but once we use it, it doesn't try to manipulate

us. The internet has been very different. The internet has

asked us to give all of our information to it in order

to do anything and this is a terrible idea because

the information is the power.

So people have to understand when they get these sort

of free services like free searcher, free social

networking, what they are really doing is giving over

the true value which is the data about themselves and their

friends that can be used to drive these behavioural

models that then can be used to concentrate fortunes.

They're giving away the stuff that's really valuable

and what they're getting is trinkets. They're putting

themselves in the position of lesser citizens who can't

really bargain, can't really have first class status

in the economy anymore.

-I'm a satisfied customer. And I love the service

you provide. And when you write to me and say, having bought

this biography of John Major, you may be interested also

in Fifty Shades of Grey.

(laughs)

But like the Chair, I'm interested in why you pay

so little tax, corporation tax particularly, in this country,

so that we can pay some kind of benefit to all the booksellers

you've put out of business, because undoubtedly, you've put

a large number of booksellers some of them local, in my case,

out of business. And I don't get, frankly, from all

this interview, why Luxemburg is so lucky? I mean, the books are

here, the warehouses are here, the billing is here,

the business is here, the customers are here...

-We've paid in excess of 100 million in payroll

taxes in the fast, last five years. We've paid tens

of millions in business rates, in the past five years...

-I've heard this argument, so let me just kill this argument,

because it really makes me cross. On the one hand,

so does every other business, so the community-based

bookshop that you're putting out of business also pays business

rates, also pays its PAYE, also pays the, actually probably pays

VAT in a way that you don't. And you in the same way

and you're making it uncompetitive and the other

thing is you depend on the services that come out

of the tax you pay. So you know, you depend on the ability

of your, of getting your goods around so you've got to get

the truck, you've got the roads in place, you depend on all

those things and probably worse of all, both you and M. Alstead

employ people on probably minimum wage if we're lucky,

and then we the taxpayers, pick up the tax credit bill

for that too. So we're putting a lot of money back into

the people you put, and you're not putting enough tax

into our economy. That's what's riling us all.

-I don't...

-Buggy whips were huge in Rochester, New York.

And indeed when automobiles took over the buggy whip

manufacturers closed shop. But what took over instead

in Rochester was cameras, Kodak and Polaroid were headquartered

there and then there was this whole new world. Now,

Kodak had hundreds of thousands of employees, really good solid

middle class jobs. Kodak and Polaroid both went bankrupt.

The new world of photography is Instagram which had 13 employees

and sold for a billion dollars to Facebook, Facebook is a giant

public company controlled by one person. So what we are seeing

is the use of digital networks to create intense, unbelievable

and precedented concentrations of wealth within the market

system, which is no longer the market system at all.

It's something entirely different. It's a feudal system

and this is a great example of it. Buggy whips, cameras,

Instagram. Employees, employees, no employees.

We've created this engine of almost guaranteed

concentration of wealth and power for whoever has

the biggest computers, whoever has the most central position

on networks. It's not a playing field, it's a funnel.

-And I think that what is happening is not simply

more poverty, more inequality, more lack of opportunity.

No, we are dealing with expulsions. At some point,

more inequality is not simply more inequality. We need,

it needs another name. People are being expelled

from livelihoods.

-Finance is basically a utility. Finance does not manufacture

anything you can touch or feel, it doesn't market anything

you can see. None of those are its products. It's a utility

that is supposed to serve the rest of the economy.

What we've done and certainly what financial leaders want

to do is almost turn that on its head and make the economy

be driven by finance.

If the financial sector were really providing value

to the rest of the economy, the financial sector may get

wealthier, but the rest of the economy should grow too.

Their share of the pie should be the same.

But what's happened is their share of the pie has doubled

to levels that are just almost unprecedented historically.

One of the changes that certainly occurred is that

at the end of the Second World War, the average time

an investor held on to a share of stock was measured in years.

And what's happened is that as technology has advanced,

and practices have advanced, the average time of holding

on to shares of stock first fell to an hour, than minutes.

And more recently, it's been measured as the average holding

period is 22 seconds.

Many of the holding periods aren't measured in seconds

at all. They're measured in thousandths of a second,

or millionths of a second or a billionths of a second.

And the turn is just like completely instantaneous.

That activity is activity that has nothing to do with

creating jobs for anybody other than the people who work

not too far from where we're speaking right now

on Wall Street.

-We now have this extraordinary phenomenon called

high frequency trading.

People who do high frequency trading have to get their

computers so close to the computers of the Central

Stock Exchange or whatever is the exchange, that the fiber

optics that they connect them will be able to buy and sell

something in way less than a second, less than a tenth

of a second. And of course at that level, they can't

possibly be making an informed judgement about what

that equity is worth. They are simply switching on computers

that have what are called algorithms, rules of the game

written to each other. And these are computers just chasing each

other round and round in circles. Now, I think

there's a debate as to whether or not that does harm,

but I think it's certainly useless. I don't think there's

any social value. This is not making the allocation of capital

more efficient. It's not usefully determining whether

the savers of a pension fund give their money to this company

or that company according to its products or its entrepreneurial

capabilities. That's the useful activity, but we often go

beyond that to levels of activity which don't serve

a useful purpose.

-70% of financial trading happens, and I'm quoting:

'In black pools'. Now you might think that black pools is

a language of, you know, those of us who do work on

the informal economy, on illegality, etc. No.

That was Bernanke, the head of the Federal Reserve Bank

of the United States. That means that the Federal Reserve is

unable to really understand what exactly is happening there.

-What's really happening in the dark pools is people are

trying to escape detection by some of these computers,

these robots that are trying to detect behaviour before

it actually occurs.

So, so many things get affected, not just the securities markets

but fuel prices for people who heat their homes and fill

their cars. Food prices for people in developing

countries. All of these things get affected and that's

really problematic.

-Finance is supposed to spread risk, manage risk, but instead

finances become the great source of risk. The financial sector

has expanded boundlessly both in its size and its

profitability while at the same time destroying the world's

finances. I mean it's absolutely absurd and yet we're all

civilized, we're all nice as we should be, we respect

the system we've all agreed to and we accept the benefits

that have occurred to people who have participated in

schemes that are mathematically absurd, just pure nonsense.

But we cannot sustain it, it's simply impossible.

We cannot continue.

-When we talk about Robin Hood taxes of financial transaction

taxes, we're talking about imposing the tax on only one

small part of what the finance sector actually does.

We're saying that trading, that is trading assets back and forth

should be taxed. If you are an investor and buy some stocks

today and hold them for 2 years, 5 years, 10 years, whatever,

you would pay a small fee going in and small fee going out.

But that would be trivial to you.

-To tax every financial transaction, that has a single

nice simple aim, a bit of redistribution. It doesn't kill

the monster. But it does, you must know, every time

you do one of your monstrous activities no matter how

tiny, you redistribute a bit.

Those transactions, because of the tax, will have to pay

the tax and so they won't be as profitable. You'll cut back

on those kinds of transactions, so the financial transaction

tax will actually reduce risk in the economy and risk

to the system to try to avoid another crash.

By the way, I'm really scared. Another much bigger one

that can't be stopped.

-The officer, Captain Herbie Johnson had his people

up there and the fire got really nasty really quick and

there was a flashover. And Herbie and one of his people

were caught on the second floor and Herbie suffered some

pretty bad injuries and he didn't make it, so...

Shortly after that, we got a visit on my shift from

the mayor. And Mayor Emmanuel came in. So he offered his

condolences and he also said that he had just come from

speaking to Herbie Johnson's family again and to see how

they were doing. To check in on them, see if they needed

anything. And I'm thinking you know, maybe it was the mayor's

thing to do. For him to come to us and do that, I thought

it was a really classy gesture. Then he goes with that same

demeanour and says: 'now, I want to talk about your pensions.'

So right away, the alarm bells are going off in my head,

because he used to come, he was coming around to the firehouses

before he got elected, when he was campaigning, talking

about the same issue. And what he would tell us is there's

no easy choices, your pension is badly underfunded.

If you guys want to have something going forward,

we're going to have to make some tough choices to make sure

that you do.

-If we don't take care of the inherited past,

be honest with our employees, be honest with our taxpayers,

we're going to be stealing from our future and that's just

the wrong course to do.

-So I don't know what possessed me, I guess I'm sometimes

a troublemaker once in a while. So I sort of raised my hand

and I said: 'You know, I've got an idea, while our pension fund

has been suffering, and people have been losing their homes,

we know there's one sector of our economy that's doing

pretty well. Because we bailed them out, it's the banks,

it's the investors. If we were to institute a tiny financial

transaction tax on the Board of Trade, and the Mercantile

Exchange, we could recoup some of these losses and we'll be

getting it back from the people who squandered it in the first

place. They won't notice it's missing, it could just be

a tiny tax and you could just bring in tremendous amounts

of revenue and solve some of these budget crises.'

And he said: 'I don't support that. If you go down

to Springfield, the state capitol, you won't find any

legislators who support that. If you think it's a good idea,

you should run for office.'

The important thing I think were the financial transaction tax

to me is not just practical, it's also symbolic.

It's saying look, we are not going to let you investors,

bankers, do whatever you want and cause all this damage

to all these people who you see as beneath you or not as

important. If there's some value in what you do, you'll do it

with a smaller profit margin. You'll do it and pay more

taxes. And if there's no value in what you do, you know what,

we are going to make it illegal. But until we figure that out,

you're going to pay whatever we decide you're going to pay

to help recoup some of this loss that you've created, to help

repair some of this damage that you've caused. But I think

if we, but we have to change our thinking though

as a society in general.

Do you want to put another coat of paint on the bond trader's

boat or do you want to make sure your firefighter has a pension

to go to when he retires? Take your pick. It's an easy choice

as far as I'm concerned.

-The financial transaction tax at a time where we're struggling

to get our economies growing, is quite simply madness.

That is why Britain's been arguing for a pro business

agenda in Europe.

-The Griffin, it's present as a symbol of the city at the gates

of the city so you can see it all around the Square Mile.

But it's more than simply a symbol. It seems to in my mind

express something of the spirit of the city.

And I experience that spirit as demonic because it's the only

way that I can understand how the system works because

individually the people in the city are good people.

They're not bad people.

But there is within this system something at work that causes

us to exploit the world's resources that is causing us

to act against our own interests.

-Now of course it is right that the financial sector should pay

their share, but if you look at the European commission's,

own original analysis, that showed that a financial

transactions tax could cost the GDP of the European Union

and could reduce it by 200 billion Euros.

It could cost almost 500 000 jobs.

-I could imagine that if it produces some or less

financial activity, there might be at the end of the day

somewhat less people employed in the financial services industry

across the world. But I'm a sufficient believer

in the dynamism of capitalism that they find other jobs

to do and actually think that we are overproducing

financial services and we'd probably find better jobs

for them to do.

-I mean again it comes back to the French attitude,

if you charge people 75% rate of income tax, aren't we going

to have a lot more money? No. Because people will stop paying

it because they'll either move away from it or they'll devise

ways of avoiding it. And of course it is only in the west

so most of the trade will move to Asia with no intention,

I can tell you, of putting on any form of transaction tax.

-There's a couple of problems with that. One, South Korea has

a financial transaction tax. Taiwan has a financial

transaction tax. Singuapore has a financial transaction tax,

as do several of the smaller markets.

-Those who are against it, who just don't like it,

what they do is they try to persuade enough countries

to be against it that they can than say, oh well there's

no point in the rest having it because it will move to those

against it.

-The City of London guards its freedom to do exactly

as it wants jealously. It's not going to sign up to anything,

that's going to impose a tax however small on the vast

volume of money that passes through the city every day.

It's not so much because they would lose huge amounts

of money, there's so much money in the system. I doubt

they would even notice it. I think the resistance is

more because it's smacks of the beginning of the possibility

of a global tax regime.

-We're celebrating the spirit of the Occupy movement and

the nurses globally from 16 countries are bringing the same

message to their governments that we want to end austerity

measures and pass the Robin Hood tax.

-Chanting: Banks got bailed out, we got sold out!

-People used to in their positions use that money

to invest. To invest in our country, to invest in people

and they're not doing it anymore. We saw that with

the banks, they're just hoarding it. And as a nurse, I would

say, they're probably a little bit mentally ill. It's not

normal to want to hoard all that money, it's more than

you could use in a lifetime. And the people in this country

need it. They are on a planet with other people,

they are in a country with other people and that money needs

to be put to good use. We pay sales tax on everything

we buy, we are used to doing it. And if we have to pay sales

tax on food and items of clothing and the things

that we use everyday, they should be paying a sales

tax too. And that's what we're asking.

-And this is revenue that would come in each year from

the private sector into the public sector

and the impact that it actually will have on our economy is

enormous. So that's one of the reasons why people like

Bill Gates, Warren Buffet, George Soros, all of whom

are certainly known you know, left-wing liberal have all

supported the Robin Hood tax.

-I grew up in the segregated South of the 1950's.

And I saw the kinds of inequalities there.

And that angered me and now when I look at what's happened,

not just in the US, but in a lot of wealthy countries,

over the last 30 to 35 years you see the huge shift

of income upwards to mostly 1% of the population in which

by the way financial employees are over represented in that

1%. Very significantly, when I see that, I think that level

of inequality is not justified but it also doesn't build

the economy over the long run for the rest of us.

And so this is a tax that as we'd lime to say in

the Robin Hood Tax Movement, is not a tax on the people,

it's a tax for the people.

-There's not a problem with coming up with technical

solutions to these problems that we've identifies. It's

a political problem, it's an organizing problem.

It's a problem with major, parties have been captured

by this global haven industry and the multi national

companies that... It represents in the wealthy individuals

that it represents. And left to their own devices,

those parties will not step forward and advocate

these kinds of reforms. We need to put pressure on them.

-So arguably, although the foundations of the fiscal

state have certainly been eroded by offshore finance, the fact

that we now know about it means that perhaps we have

the possibility of a greater democratic handle on it.

This is something that now affects individuals.

Until 2008, perhaps we didn't see it so clearly.

What the bankers do has direct consequences for every

individual and we can now see that.

-The reason in fact that the tax justice movement in general

are growing as a worldwide phenomenon because, precisely

because the experiment we ran with liberalization

of markets didn't work.

We don't have a welfare state anymore. We've had 30 years

of dismantling it.

-And in Europe we can talk about, you know, the corporate

state, and it has another name and that is fascism.

And fascism is stalking the streets of Europe once

again, you can see it on the streets now in countries

which are failing. And in many cases they're failing because

the governments like the Greek, government of Greece, was

incapable of taxing effectively.

And in an era of globalized capital markets, you can't

preserve national sovereignty without a framework for

international corporations.

-International law has to change and these companies need to be

held accountable for tax law, tax evasion no matter what

country they're in. And I think it's just like other things

like human rights abuses, like work standards worldwide.

This stuff need to become globalized. It's a joke to think

that these countries are going to be held accountable

by one certain nation's laws on tax. It has to be a global

thing. And it really has to evolve to that point I think.

-In case of political power, we not only see this enormous

concentration of wealth beyond the realm of taxation.

But the reverse side of that is increased representation

without taxation for those interests.

And so they have the best of both worlds. Citizens

of nowhere for tax purposes and super representation

without taxation. And that's just not a solution we can live with.

-At the end of the day, this is the tax haven, the offshore

system is a project of the world's wealthiest

and most powerful people. And they will always be pushing

for this system to exist and the challenges to get

the people to sort of push back against that and to understand