HSBC, The Swiss and Rich Envy

3 mins. to read

By Zak Mir

It seems fair to say that as sovereign debt started to crash central banks and governments over the past few years, the blame game started to be ratcheted up, especially in the financial media. Part of the end game of this is playing out in Greece, with austerity still a dirty word in many other Western economies.

Of course, the bailout of the banksters was referenced at the time as being an example of moral hazard, as it was the only sector to be bailed out after suffering in the financial crisis – the irony being that it was almost wholly responsible for the implosion of 2007/2008. However, the banks have not got away scot-free even though to all intents and purposes the cartel they operated pre crisis is as robust as it was back then.

This is because they are being slowly strangled by regulation, red tape and belated fines on retrospective criminal actions in which the regulators are both judge and jury. That said, the banks are happy to pay out because the fines come out of their profits and are paid by the customers who indirectly bailed them out seven years ago. The regulators of course keep their protection racket going, and their closing the stable door after the horse has bolted modus operandi.

What can be seen on a contemporary journey through the world of finance is the way that rather than just banks, the big enemy would appear to be a minority which is becoming equally unpopular: the rich. They are now in the spotlight, standing accused of owning a seemingly ever-increasing share of global wealth. But it would appear their greatest crime, apart from having all the cash, is having broken the worst of taboos: taxation. As it would appear that all of our ills are due to a lack of tax paid, rather than money being wasted on open-ended welfare sacred cows like the NHS, the idea is that the super-rich should be able to pay for the fiscal open wound many Western economies are currently suffering.

In fact it is interesting that the latest scandal as reported by The Guardian combines both an international bank in the form of HSBC as well as rather more shadowy goings-on in Switzerland, the home of the alleged tax evaders. What verges on the comedic is the way that this story has been delivered in “scoop” form which rather suggests that most of us were not aware that the filthy rich have been siphoning off their money in more or less secretive ways for hundreds of years to a mountainous country in central Europe.

Of course, as more objective observers of the tax/rich conundrum are aware, most do not pay as much as the rest of us as they tend not to be based in just one country, and pay accountants and others large amounts of money to be as “efficient” as possible. Indeed, no amount of Draconian tax chasing or changing would be able to change this state of affairs – apart from a suggestion that I would make.

In fact, it would be one which is rather obvious in the sense that just as the most fair road tax is one where the more you drive the more you pay, via the cost of fuel, indirect taxes for the rich above a nominal 10% flat income tax rate would probably solve most of the problems as it would simply not be worth it to try to avoid the taxman. The more you spend, the more you save angle would be completed by moving the system to indirect taxes, with VAT up to 50% on a sliding scale. This has to be the key to the whole issue – whatever the political angle is: low income tax/high direct tax.

What is interesting with regard to the latest financial media rant regarding the subject is the way that there has been no accusation of direct illegal activities, simply the confession of “control failures” by the “world’s local bank” and a general moan regarding how much cash has got away. Presumably, HSBC shareholders are going to have to prepare themselves for another fine. But then again, it has been some months since the last one was extracted. Such events are alas, merely part of the everyday hazards of doing business in the banking sector.

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