Well, it's up - by Helen... Wednesday, September 02, 2009

Well, it's up - by Helen... Wednesday, September 02, 2009

eureferendum.blogspot.com

As promised that posting on the beginning of the Second World War. No, I am not early - fighting had been going for a couple of days by the time the Prime Minister, Neville Chamberlain made that broadcast. I have just been reminded that in the few weeks of fighting the Poles inflicted a good deal on the Germans, who lost around 50,000 men. But, of course, there was the other invasion on September 17, the rounding up of Polish officers and deportation of Polish civilians to Central Asia, whence many emerged in 1943 in unspeakable conditions. But that is for another day.

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Round and round - by Richard...eureferendum.blogspot.com

In the latest instalment of that curious crime known as "carousel tax fraud",Reuters is reporting that measures to prevent fraud in carbon permit trading may not be working. A patchwork of unilateral actions by a few EU member states, it says, could serve only to push the activity into neighbouring states.

The news agency has carried out its own investigation into this scam and found that a mix of tax loopholes, lack of regulatory oversight and easy market access that could open the EU's $90 billion emissions trading scheme to abuse. Investment banks and brokers are thus worried they may have to foot unpaid tax bills left after any fraud or face legal action for having traded unknowingly with anyone charged.

It was early last month that we reported on attempts to rob the taxpayers of EU member states of hundreds of millions, and although the UK took quick action to head off the scam at the pass, its efforts to catch the crooks have been unsuccessful.

High-profile action by HM Revenue and Customs (HMRC), which raided 27 properties around London following a 7-month investigation into a suspected £38 million fraud, had nine people were arrested. All have since been released without charge.

David Bates, a director at emissions broker CarbonDesk makes the obvious point. "It's put the innocent intermediaries in a very awkward position of responsibility and liability, which isn't fair," he says. And that is indeed the case. By the time the authorities pick up the fraud, the original perpetrators have usually long gone, leaving the downstream firms, who have been unwittingly scammed, holding the baby. 

The latest target is the spot trade in carbon permits, an unregulated market worth tens of billions of dollars. It is particularly attractive because of its tax treatment in the EU and lack of oversight by financial watchdogs. But the irony of it is that, while governments stand to lose shed-loads through fraud, they make nothing because the VAT is eventually reclaimed anyway.

Furthermore, as James Emanuel, a director at broker CantorCO2e, says: "Carbon permits are a tax on emissions, and applying VAT to them is effectively putting a tax on a tax, which is kind of ludicrous." 

“Ludicrous" is not a bad name to apply to the tax as a whole, which is estimated to cost European taxpayers some £40 billion a year, with British losses in 2005–06 running to between £2 to £3 billion.

To stem the losses on carbon credits, France exempted carbon permits from VAT in June. In July, Britain and the Netherlands followed France's lead, altering their tax treatment of the permits. However, there is nothing to stop fraudsters moving on to other countries such as Spain and Germany, where large amounts of carbon permits are traded.

The EU Commission, of course, would not comment on specific countries at risk and other countries are keeping schtum. So too, with the notable exception of Reuters, is the media in general. 

It has always been a strange facet of this gigantic crime that publicity has been sparse. It is as if the media simply cannot cope with the scale of the losses, or that fact that, arising from an EU tax, the establishment does not want to acknowledge by how much it has been conned.

Interestingly, wherever this tax system exists, there is fraud and, wherever there is fraud it seems, the perpetrators get away with it.

In the final analysis though, the ultimate beneficiary will be the EU. Virtually unreported in this country, the Council recently adopted a proposal to set up "Eurofisc": a common operational structure "allowing" Member States to take rapid action in the fight against cross-border VAT fraud. 

Soon enough, there will be an executive agency to run this system, with more eurocrats to feed at the tit of public finance, tightening economic and therefore political integration even further. Once again, we see engrenage in action – first create the problem and then come up with a solution that requires more integration. And no one seems to give a damn.