From the UK’s Telegraph:
Bruce Packard, an analyst at Seymour Pierce, said Barclays risks “a fierce customer backlash” if it does not reduce its exposure to offshore tax havens or limit legitimate tax avoidance, and focus instead on service.
Now Seymour Pierce is an investment bank and stockbroker, and it’s excellent to these hard-headed investors judging their peers like this.
Mr Packard said: “At Seymour Pierce we are rather sceptical of companies that operate in offshore tax havens, believing companies generate shareholder returns by performing services or making products their customers value, rather than through complicated financial structures.”
Goodness gracious! Brilliant to see hardened bankers saying this: an idea that’s straight out of Treasure Islands. Tax dodging has nothing to do with productive efficiency, and everything to do with transferring wealth away from shareholders. Not wealth creation, but wealth extraction. Not only that, but I have explained how I believe it highlights an entire management ethos – see my comments about the Vesteys and the internet giant Amazon here. Anyway, well said that man Packard.
In the interests of balance, of course, I should add this:
Barclays stressed that it has signed up to the UK code of practice on tax, is entirely transparent with HM Revenue & Customs, and pays “all the tax due in all the countries we operate”.
And on a related but important matter, the Telegraph provides a powerful argument in favour of country-by-country reporting:
In 2010, Barclays generated £591m of so-called “deferred tax assets” by making about £2bn of losses in subsidiaries in the UK, US and Spain, despite reporting £6bn of pre-tax profits at group level. The bank has declined to disclose where the losses were incurred.
Country-by-country reporting, if designed correctly for the financial sector, could bring that crucial information right out into the open.
Article hat tip: Chris Jordan.