Tax Cheating

 Tax evasion and avoidance schemes have cost governments an estimated €150bn (£127bn) in lost revenues, research by a team of experts at the University of Mannheim, in partnership with the German not-for-profit group Correctiv, shows.

So-called cum-cum and cum-ex schemes are designed to exploit weaknesses in national tax laws. They apply to the payments, or dividends, firms make to shareholders.

So-called cum-ex trades were transactions where shares were sold from one investor to another immediately before the payment of a dividend (cum, or with, dividend) but delivered afterwards (ex-dividend).

This tactic effectively created confusion over who owned the shares at the moment when the dividend was paid. It allowed both parties to claim rebates on withholding tax – a levy which had only been paid once, when the dividend was issued.

This practice became popular in Germany in the early years of the century and continued until 2012, when the law was changed. It also spread to other countries, notably Denmark, but also France, Belgium, Italy and Austria. Evidence from leaked documents and people involved in the schemes suggests UK taxpayers have also lost out, potentially to the tune of billions of pounds. In Germany, prosecutors have launched a wave of criminal inquiries.

Documents show that bankers were able to carry out related trades to “recycle” otherwise unusable German tax credits and generate profits at UK taxpayers’ expense.

The complex system relied on so-called “manufactured overseas dividends” (MODs), payments made between parties involved in so-called short sales of borrowed shares in foreign companies. It allowed investors to generate liabilities which could be offset against German tax credits and at the same time, generate a credit against UK tax.

Estimates vary as to how much this scheme actually cost the UK taxpayer. One individual who was involved in these kinds of trades in the past suggested it would have been several hundred million pounds a year until 2005 – and more than £100m per year thereafter. Another whistleblower told the BBC that “these were not small trades”, and that the practice “must have been used on a significant scale”.



Cum-ex is understood to have cost governments nearly €10bn. But according to researchers at the University of Mannheim, that figure is dwarfed by losses stemming from another long-standing form of dividend arbitrage, known as cum-cum.

This strategy comes into play in countries where domestic and foreign investors are treated differently for tax purposes. A foreign investor will sell or loan shares just ahead of the dividend payment to a second investor resident in the country where the company is listed.

The second party is able to claim a dividend tax credit that would not have been available to the foreign investor. The shares can then be passed back to the original owner, and the benefits shared.

The Mannheim team has calculated that between 2000 and 2020, this practice cost 10 governments, including those of Germany, Spain, France and the US, a total of €141bn. It describes this estimate as “very conservative”.

Whether these losses will lead to prosecutions is less clear, however. While cum-ex involved generating multiple claims for withholding tax that had only been paid once, and its use has been described as a “criminal act of tax fraud” by Germany’s Federal Court of Justice, experts say cum-cum sits in a legally grey area.

“It’s not against the law,” explains Christoph Spengel, a professor of international taxation and the leader of the Mannheim team. “But in individual cases, in Germany it is against the law if the sole purpose of buying and repurchasing shares is to have a tax benefit.”



Tax cheat schemes cost governments billions – BBC News



The fact that the rich cheat on their taxes and deprive the State of revenue to run the country should not surprise socialists. It is far more a concern of the capitalist class that they thieve from one another. 

Increased Poverty

 



Nearly 4 million low-income households are behind on rent, bills or debt payments, up threefold since the pandemic hit, according to a study by the Joseph Rowntree Foundation (JRF).

It reveals the growing cost of the living crisis facing the UK’s poorest families.

A third of the 11.6 million working-age households in the UK earning £25,000 or less were found to be in arrears on their rent or mortgage, utility bills, council tax bills or personal debt repayments. The findings indicate that 3.8 million households are behind with household bills, 950,000 are in rent arrears, 1.4 million are behind on council tax bills, and 1.4 million are behind on electricity and gas bills.

A third of all low-income families are in arrears, up from 11% prior to the pandemic, it estimated. This rises to 44% of working-age households and 71% of younger households aged between 18 and 24. Families with children and black, Asian and minority ethnic households were particularly hard hit.

“Behind these figures are parents gripped by anxiety, wondering how they will put food on their children’s plates and pay the gas bill; young people forced to rely on friends to help cover their rent and avoid eviction,” said Katie Schmuecker, the JRF deputy director for policy and partnerships.

 The Tory-controlled District Councils Network (DCN), which represents 200 councils in English towns, has warned of a rise in homelessness this winter as a result of the end to government support measures such as furlough and eviction ban. A survey of district councils completed earlier this month found that just under three-quarters reported an increase in homelessness acceptances over the past four months, while nearly two-thirds said people they had housed during the pandemic had recently slipped “back in the homelessness cycle”.

District councils also reported increased numbers of families seeking support, and increases in the numbers of residents with severe mental health and other complex needs using council services. More than a third of councils reported significant increases in referrals to local food banks.

Third of low-income households unable to pay bills, finds research | Household bills | The Guardian

Dissension at COP26

 



Countries are trying to change a crucial scientific report on how to tackle climate change.

 Saudi Arabia, Japan and Australia are among countries asking the UN to play down the need to move rapidly away from fossil fuels.

It also shows some wealthy nations are questioning paying more to poorer states to move to greener technologies.

There are a number of countries and organisations arguing that the world does not need to reduce the use of fossil fuels as quickly as the current draft of the report recommends.

An adviser to the Saudi oil ministry demands “phrases like ‘the need for urgent and accelerated mitigation actions at all scales…’ should be eliminated from the report”.

One senior Australian government official rejects the conclusion that closing coal-fired power plants is necessary, even though ending the use of coal is one of the stated objectives of the COP26 conference.

Saudi Arabia is the one of the largest oil producers in the world and Australia is a major coal exporter.



A senior scientist from India’s Central Institute of Mining and Fuel Research, which has strong links to the Indian government, warns coal is likely to remain the mainstay of energy production for decades because of what they describe as the “tremendous challenges” of providing affordable electricity. India is already the world’s second-biggest consumer of coal.



A number of countries argue in favour of emerging and currently expensive technologies designed to capture and permanently store carbon dioxide underground. Saudi Arabia, China, Australia and Japan – all big producers or users of fossil fuels – as well as the organisation of oil producing nations, Opec, all support carbon capture and storage (CCS).

It is claimed these CCS technologies could dramatically cut fossil fuel emissions from power plants and some industrial sectors.

Saudi Arabia, the world’s biggest oil exporter, requests the UN scientists delete their conclusion that “the focus of decarbonisation efforts in the energy systems sector needs to be on rapidly shifting to zero-carbon sources and actively phasing out fossil fuels”.



Argentina, Norway and Opec also take issue with the statement. Norway argues the UN scientists should allow the possibility of CCS as a potential tool for reducing emissions from fossil fuels.



The draft report accepts CCS could play a role in the future but says there are uncertainties about its feasibility.



Australia asks IPCC scientists to delete a reference to analysis of the role played by fossil fuel lobbyists in watering down action on climate in Australia and the US. Opec also asks the IPCC to “delete ‘lobby activism, protecting rent extracting business models, prevent political action’.”



Brazil and Argentina, two of the biggest producers of beef products and animal feed crops in the world, argue strongly against evidence in the draft report that reducing meat consumption is necessary to cut greenhouse gas emissions.

The draft report states “plant-based diets can reduce greenhouse gas emissions by up to 50% compared to the average emission intensive Western diet”. Brazil says this is incorrect.

Both countries call on the authors to delete or change some passages in the text referring to “plant-based diets” playing a role in tackling climate change, or which describe beef as a “high carbon” food. Argentina also asked that references to taxes on red meat and to the international “Meatless Monday” campaign, which urges people to forgo meat for a day, be removed from the report.

The South American nation recommends “avoiding generalisation on the impacts of meat-based diets on low carbon options”, arguing there is evidence that meat-based diets can also reduce carbon emissions.

Brazil says “plant-based diets do not for themselves guarantee the reduction or control of related emissions” and maintains the focus of debate should be on the levels of emissions from different production systems, rather than types of food.

Brazil, which has seen significant increases in the rate of deforestation in the Amazon and some other forest areas, also disputes a reference to this being a result of changes in government regulations, claiming this is incorrect.



It was agreed at the climate conference in Copenhagen in 2009 that developed nations would provide $100bn a year in climate finance for developing countries by 2020, a target that has yet to be met.



A significant number of Switzerland’s comments are directed at amending parts of the report that argue developing countries will need support, particularly financial support, from rich countries in order to meet emission reduction targets.



Australia makes a similar case to Switzerland. It says developing countries’ climate pledges do not all depend on receiving outside financial support. It also describes a mention in the draft report of the lack of credible public commitments on finance as “subjective commentary”.

A number of mostly Eastern European countries argue the draft report should be more positive about the role nuclear power can play in meeting the UN’s climate targets. India goes even further, arguing “almost all the chapters contain a bias against nuclear energy”. It argues it is an “established technology” with “good political backing except in a few countries”.

The Czech Republic, Poland and Slovakia criticise a table in the report which finds nuclear power only has a positive role in delivering one of 17 UN Sustainable Development goals. They argue it can play a positive role in delivering most of the UN’s development agenda.


COP26: Document leak reveals nations lobbying to change key climate report – BBC News

The disagreements over climate policy reveal the conflict between national interests and reaching the solutions to the climate crisis. COP26 will not be a meeting of minds.

Populations in Decline

 The World Socialist Movement has described over-populationists – those who subscribe to the dystopian predictions of Thomas Malthus and advocate drastic family planning policies – as pushing against an open door as the trend towards a decline in the numbers of people is already in process.

Lord Adair Turner, former chairman of the Financial Services Authority, said that a gentle decline in birth rates would “deliver significant benefits to human welfare”. Writing in a research paper, he argued that with the right government policy an ageing population would not pose a threat to the economy. Lord Turner, said: “The biggest reason to welcome this demographic shift is that it results from the free choice of empowered people, and in particular women.

Low birth rates and an ageing population have often been seen as a looming crisis, with economists arguing there will not be enough people to work and contribute to the future economy. This, coupled with the rising cost of pensions and health care, has made people increasingly worried about shrinking populations and smaller families. But the report, ‘Smaller Families and Ageing Populations,’ explains this is good news.

In Japan, women give birth to an average of 1.36 children, down from 2.1 in 1974. In England and Wales the figure is 1.6. By 2035, the Japanese population is set to decrease by 9.6 per cent from 125m to 113.1m people. 

The report did acknowledge that labour shortages would become an increasing problem with an ageing population. But it argued automation in the work force and migration would be key to dealing with this issue.

Population decline good news for climate, says former finance chief | The Independent

Failure to cut fossil feuls

 



Despite increasing pledges of action from many nations, governments have not yet made plans to wind down fossil fuel production, a report, produced by the UN Environment Programme (Unep) and other researchers, found.

Fossil fuel production planned by the world’s governments “vastly exceeds” the limit needed to keep the rise in global heating to 1.5C and avoid the worst impacts of the climate crisis, the report explained.  Global production of oil and gas is on track to rise over the next two decades, with coal production projected to fall only slightly. This results in double the fossil fuel production in 2030 that is consistent with a 1.5C rise.

The gap between planned extraction of coal, oil and gas and safe limits remains as large as in 2019 when the UN first reported on the issue. 

The report also found that countries have directed more than $300bn (£217bn) of new public finance to fossil fuel activities since the beginning of the Covid-19 pandemic, more than that provided for clean energy.

“The research is clear: global coal, oil and gas production must start declining immediately and steeply to be consistent with limiting long-term warming to 1.5C,” said Ploy Achakulwisut, at the Stockholm Environment Institute (SEI) and a lead author of the report. “However, governments continue to plan for and support levels of fossil fuel production that are vastly in excess of what we can safely burn.”

Inger Andersen, executive director of Unep, said: “The devastating impacts of climate change are here for all to see. At Cop26 and beyond, the world’s governments must step up, taking rapid and immediate steps to close the fossil fuel production gap and ensure a just and equitable transition.”

Detailed analysis of 15 major fossil fuel-producing nations found that the US, Canada, Australia, Saudi Arabia and China all project increases in oil and gas, while India and Russia intend to increase coal production. Only two of the countries expect oil and gas production to decline: the UK and Indonesia.

The new report analysed publicly stated plans and projections and found the production of 240% more coal, 57% more oil, and 71% more gas in 2030 than is consistent with 1.5C. Overall fossil fuel production is 45% more than consistent with even the weaker goal of 2C.

Planned fossil fuel output ‘vastly exceeds’ climate limits, says UN | Fossil fuels | The Guardian

Socialists have always stated that national interests will supersede the welfare of the world. 

Climate or Conflict?



 The massive expenditure for war is not a political issue for most Republican or Democratic politicians in the USA. 

While measures that cover a range of programs designed to help working people and address climate change and will cost $3.5 trillion over ten years have become contested debating points, over the same decade, the ten-year cost of $7.7 trillion for the military budget gets passed with very little criticism, despite Biden having reduced America’s military presence in Afghanistan and elsewhere.

Nevertheless, the total budget approved by the House is $40 billion higher than last year’s budget. Congress actually added $25.5 billion to the Pentagon’s budget request. And that’s not the total cost of our military spending. The United States actually spent $934 billion on the military in 2020-21. Unless there are cuts in other areas (which seems unlikely), the recently approved House budget would mean that the US will spend nearly $1 trillion on the military next year. 


The U.S.A. has spent $21 trillion on foreign and domestic militarization since 9/11. Adding in the “non-military” cost items, it is on track to spend more than $21 trillion in the next 20 years.


The Failing Food Industry

 



Among the many industries that are blamed for being damaging to the health of people and the planet is the food processing corporations. 

The foods we consume are a major driver of global heating, contributing similar amounts of greenhouse gases to the atmosphere as the UK energy system. Meat and dairy are responsible for more than three-quarters of this impact. Without meaningful reductions in meat and dairy intake, there is little chance of meeting emissions reduction targets, both at national and international levels. From a climate crisis perspective, the Climate Change Committee – the body tasked with monitoring and providing advice on greenhouse gas emissions – recommends a 20% reduction in the consumption of beef, lamb, and dairy in support of the government’s target of achieving net zero emissions by 2050. However, the committee’s own report admits that this level of reduction might be too low, and an independent scientific analysis suggested that beef, lamb and pork intake would have to decline by 89%, poultry intake by 66% and dairy intake by 61% for the UK’s food emissions to be in line with limiting global heating to under 2C.

The public health case for reducing meat consumption is similarly strong – tens of thousands of avoidable deaths from cardiovascular diseases and cancers have been linked to red and processed meat consumption in the UK. Yet, despite this public and environmental health emergency, policymakers appear unwilling to take meaningful steps that would help create a healthier, more sustainable food system. Recommended targets and policies continue to be woefully inadequate. The actual recommendation of the Eatwell Guide is even more misleading. Its target value of 70g a day would mean having a serving of red and processed meat five times a week would be totally fine, much in contrast to the current scientific understanding. A comprehensive review of the scientific literature on healthy eating suggested limiting red and processed meat intake to below one serving a week (14g a day), five times below the current recommendation. Updating national dietary guidelines to reflect the latest scientific evidence would therefore be a critical first step for reducing the 30,000 annual deaths associated with red and processed meat consumption in the UK.

Intensive industrial-style livestock farming has featured in numerous criticisms of the global food system. At least eight types of bird flu, all of which can kill humans, are circulating around the world’s factory farms – and they could be worse than Covid-19.

 Scientific evidence from the £150bn-a-year poultry and livestock industries shows that stressful, crowded conditions of factory farming drive the emergence and spread of many infectious diseases, and act as an “epidemiological bridge” between wildlife and human infections. UN bodies, academics and epidemiologists recognise the link between the emergence of highly pathogenic avian influenza viruses and increasingly intensive poultry farming.

Rob Wallace, an American virologist argues that the new strains of flu emerging are adapting to industrial poultry production. With more than 20 billion chickens and nearly 700 million pigs being farmed at any one time, Wallace says the chances of new flu strains and variants emerging and spilling over to humans are high.

 Sam Sheppard, a biologist at Bath University, says overuse of antibiotics, overcrowding and the genetic similarity between animals provide ideal conditions for many bacteria, viruses and other pathogens to merge, mutate, spread and then jump into humans.

Marius Gilbert, an epidemiologist at the Université Libre de Bruxelles in Belgium, and others have shown how bird flu is linked to the rapid intensification of poultry farming, which is now making bird flu viruses more dangerous.

Michael Greger, author of the book Bird Flu: A Virus of Our Own Hatching, argues that there have been three eras of human disease: first, when we started to domesticate animals about 10,000 years ago and were infected with their diseases, such as measles and chickenpox; then in the 18th and 19th centuries, when the Industrial Revolution led to epidemics of diabetes, obesity, heart disease and cancer; and now, because of the agricultural intensification that is leading to zoonotic, or animal-borne, diseases such as bird flu, salmonella, Mers, Nipah and Covid-19.

“In evolutionary terms, rearing poultry, cattle and pigs in high-intensity, crowded, confined, entirely unnatural conditions may be the most profound alteration of the human-animal relationship in 10,000 years,” he says “We are seeing an unprecedented explosion in outbreaks of new bird flu viruses, which historically have presented the greatest pandemic risk and certainly have the potential to be worse than Covid.”

Since African Swine Fever (ASF) was confirmed in the Americas more than two months ago, the deadly pig disease is now on six continents. The virus is an almost certain death sentence for pigs. The US pork industry – worth $23bn (£17bn) a year – is in a panic, Latin America is on alert, and pork producers in the Dominican Republic and Haiti are haunted by memories of the US-funded eradication of their entire pork population when ASF last hit more than 40 years ago.

Enough chewing the fat, UK politicians: we must stop eating so much red meat | Marco Springmann | The Guardian

Factory farms of disease: how industrial chicken production is breeding the next pandemic | Global health | The Guardian

The US has a silent pig pandemic on its doorstep once again | African Swine Fever | The Guardian

South Korean General Strike

 



South Korea ranks third in highest annual working hours and as of 2015 it was third in workplace deaths among member countries of the Organization for Economic Cooperation and Development (OECD). 

Over 40 percent of all workers are considered “irregular workers,”  many of these irregular workers labor in the gig economy, being beholden to tech giants’ apps.

With an economy and society dominated by corporate conglomerates known as chaebol, South Korean people face increasingly bleak prospects. 

The top 10 percent of earners claimed 45 percent of total income in 2016.

 Real estate speculation has led to a housing crisis, and privatization in education and health care are expanding disparities.

On October 20, at least half a million workers in South Korea — from across the construction, transportation, service, and other sectors — are expected to walk off their jobs in a one-day general strike

The strike will also be accompanied by mass demonstrations in urban centers and rural farmlands, culminating in a national all-people’s mobilization in January 2022.

 The Korean Confederation of Trade Unions (KCTU), the country’s largest labor union umbrella with 1.1 million members, is organizing these mobilizations in a broad-based front with South Korea’s urban poor and farmers. The KCTU said its members from Seoul, the surrounding Gyeonggi Province and the city of Incheon, west of Seoul, will gather in the capital to hold a massive rally.

The three major goals are the abolition of nonregular workers, a full revision of the Labor Standards Act; job security for workers in industries in transition; and increased government support for housing, education, medical care and transportation.

“We have continuously called upon the government to resolve labour issues for workers who suffered the most from Covid-19, but the government tried to muzzle us without giving an answer,” the KCTU said, accusing the government of attempting to restrict freedom of assembly guaranteed by the Constitution.

Hunger in Australia

 Foodbank’s annual Hunger Report, released on Wednesday as part of Anti-Poverty Week, suggests the number of people going hungry in Australia has increased since the coronavirus welfare supplement and job keeper payments were withdrawn.

An estimated 1.2 million children in Australia went hungry in the past year, while one in six adults also faced severe food insecurity, the new report says.

It found 17% of respondents could be “categorised as being severely food insecure”, meaning they have “multiple disruptions to their eating patterns and are forced to reduce their food intake”.

“These individuals and families are often forced to eat smaller meals to make the food last longer or skip meals altogether,” the report said.

Brianna Casey, the chief executive of Foodbank Australia, said incomes levels and the cost of living were a big part of the problem.

“Whether you’re struggling in unemployment or underemployment, or the structural supports we have in Australia are not meeting your needs, we know income levels are contributing to food insecurity in Australia,” she said.

The report found one in three people who were struggling to meet their food needs were “new to this situation”.

More than 1m children in Australia went hungry in past year, report suggests | Australia news | The Guardian

Enough has been Enough

 



The  latest US Bureau of Labor Statistics report showing that a record 2.9 percent of the workforce quit their jobs in August, which is equivalent to 4.3 million resignations.

If such a high rate of resignations were occurring at a time when jobs were plentiful, it might be seen as a sign of a booming economy where workers have their pick of offers. But the same labor report showed that job openings have also declined.

 A new Harris Poll of people with employment found that more than half of workers want to leave their jobs. Many cite uncaring employers and a lack of scheduling flexibility as reasons for wanting to quit. In other words, millions of American workers have simply had enough.

Jack Kelly, senior contributor to Forbes.com, a pro-corporate news outlet, has defined the trend as, “a sort of workers’ revolution and uprising against bad bosses and tone-deaf companies that refuse to pay well and take advantage of their staff.”  Kelly goes on to say, “The quitters are making a powerful, positive and self-affirming statement saying that they won’t take the abusive behavior any longer.”

There is now also a growing willingness by unionized workers to go on strike.  Actual strikes or calls for such are coming so thick and fast that former U.S. Labor Secretary Robert Reich has dubbed the situation “an unofficial general strike.”

Workers are flexing their power and corporate America is worried.

Union representation remains extremely low across the United States—the result of decades of concerted corporate-led efforts to undermine the bargaining power of workers. Today only about 12 percent of workers are in a union.

Workers have more leverage when acting as a collective bargaining unit than as individuals. Take Nabisco workers who went on strike in five states this summer. Mondelez International, Nabisco’s parent company, saw record profits during the pandemic with surging sales of its snack foods. So flush was the company with cash that it compensated its CEO with a whopping $16.8 million annual pay and spent $1.5 billion on stock buybacks earlier this year. Meanwhile, the average worker salary was an appallingly low $31,000 a year. Many Nabisco jobs were sent across the border to Mexico, where the company was able to further drive down labor costs.

After weeks on the picket line, striking Nabisco workers, represented by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, returned to work having won modest retroactive raises of 2.25 percent, $5,000 bonuses and increased employer contributions to their retirement plans. The company, which reported a 12 percent increase in revenue earlier this year, can well afford this and more.

Another example of how union organizing made a concrete difference to working conditions is a new contract that 7,000 drug store workers at Rite Aid and CVS stores in Los Angeles just ratified. The United Food and Commercial Workers Local 770 negotiated a nearly 10 percent pay raise for workers as well as improved benefits and safety standards.

 Business groups are lobbying Democrats to weaken pro-labor measures

Why Record Numbers of Workers Are Quitting and Striking (pressenza.com)