All language subtitles for The Price We Pay (2014) 1080p [1840009513486]

(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