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News digest 3/6/16: Chancellor likely witness in Panama Papers inquiry

03 June 2016 by Henry Ker

Chancellor likely witness in Panama Papers inquiry - read more

The latest governance stories in the news

George Osborne a likely witness in Panama Papers inquiry

The Chancellor, George Osborne, is likely to be one of several ministers called as witnesses before the committee investigating the Panama Papers and international tax avoidance.

An ‘inquiry committee’ of 65 MEPs was approved on 2 June by the European Parliament in Brussels, in order to scrutinise the tax avoidance industry. The committee, according to draft documents, will have a mandate to investigate ‘alleged contraventions and maladministration in the application of Union law in relation to money laundering, tax avoidance and evasion’.

The predicted inclusion of Mr Osborne comes as half the ‘shelf’ companies revealed in the Panama Papers were incorporated in the British Virgin Islands.

It is estimated that tax evasion and avoidance costs the EU between €50 billion and €70 billion a year.

 

Oxfam director criticises Acevo and NCVO for 'toothless' response

Acevo and NCVO has been criticised by Jack Lundie, Oxfam's Director of Communications. He called the current sector initiatives to rebuild public trust ‘toothless’ and ‘lack imagination or are incoherent in understanding where the audience are at’. He also accused them of failing to provide leadership and lacking in a concerted response when defending charities from public criticism.

In his speech at Civil Society Media’s NGO Insight conference, Mr Lundie said: ‘The absence of a concerted response is a little bit of an indictment of organised networks like Acevo and NCVO … We need real leadership from our chief executives – not just acting like they are talking shop, but to demonstrate sector-wide, less unilateral interest.’

 

Shareholder disquiet at Old Mutual

A shareholder rebellion is on the cards at Old Mutual over the pay packet of its CEO. The group is proposing a payout of 1,000% of Chief Executive Bruce Hemphill’s base salary.

The amount has been criticised by some investors as being ‘unusual’ in ‘nature and size’ and are considering voting against it. Mr Hemphill’s base salary is proposed as £900,000, and this means potential earnings of £9 million over three years of the long-term incentive plan.

Old Mutual said it has consulted with 50% of its shareholders over the plans and commented that the remuneration reflects the ‘feedback received’.

 

‘Uberisation’ of the economy poses challenges for outdated tax system

The tax base is significantly changing due to the ‘Uberisation’ of companies the and ‘gig economy’ of self-employed or temporary workers, according to Angela Knight, the new Chair of the Office of Tax Simplification.

She commented that the tax system was built for the working world of several decades ago: ‘Companies that used to pay corporation tax, employers’ national insurance contributions [NICs] and be the tax collector for the individual employees are now being replaced ... employers’ NICs will be reduced like a stone.’

Her words echo the recent comments of business theorist Charles Handy in his interview with Governance and Compliance. He said: ‘So we now have a ‘gig economy’, in the sense that you sign on with a company to do a ‘gig’, but not long term … governments have relied on corporations to be their principal delivery agents for society. They collect the taxes; they provide decent conditions of employment; they look after the health of their workers; they make sure that women have the same pay as men, or they should do. The state uses organisations to deliver their laws and monitor the country. But if these organisations begin to dismantle themselves, what control does government have?

‘The government is surprised because we have more people in work than ever before yet income tax receipts have gone down. A lot of those extra people working are self-employed or part time. They are either not earning enough to pay tax or they are not telling anybody what they are earning.’

Read the full interview, ‘A self-regulating world’.

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