Bangers And Tax
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Something hopeful first
As luck would have it, my visit to Des Moines, Iowa a couple of weeks ago coincided with the Iowa Environmental Council’s Wild & Scenic Film Festival.
Since I was there with a group of cool folks for an exchange programme on climate issues, we thought it was apt to attend the festival, which was held in a very plush and comfy cinema theatre where the seats recline and the footrests elevate. But the real draw was the documentaries on offer, and one in particular really struck me.
It’s called A River Reborn, about the restoration of the Little Conemaugh River in Pennsylvania whose orange-hued waters were a result of poisoning from toxins leeching from countless abandoned coal mines.
Doing the job we do, it’s easy to get depressed and frustrated at what seems to be a world hurtling in the wrong direction in almost every conceivable way (hello, Italian election results!), so this half-hour documentary, which charts how dedicated locals worked tirelessly to turn the situation around, filled me with hope and optimism. I hope it does the same for you.
Big Meat’s “aggressive tax avoidance”
My colleagues at Lighthouse Reports have released another hard-hitting investigation into the gaps and shortcomings of the current food system. This time, their findings revealed that some big meat companies are getting away with not paying taxes on income of more than €200 million.
They focused on two companies in particular – Anglo Beef Processors (ABP), owned by Irish billionaire Larry Goodman, and Pilgrim’s Pride and Moy Par, both owned by Brazilian beef giant JBS, the world’s largest meat company, which has been in the news lately for its alleged links to deforestation in the Amazon.
Between them, they control a third of Britain’s beef and chicken production and a quarter of its pork. If you’ve eaten at McDonald’s, KFC or Nando’s recently, chances are you’ve eaten meat they’ve supplied.
They are also among the few winners in Europe’s dysfunctional food system.
“While they do not benefit directly from most agricultural subsidies, the low price they pay farmers for livestock is sustained by public money,” said Lighthouse.
How does the tax avoidance work? Well, both groups used finance companies in European tax havens – in this case, the Netherlands and Luxembourg – to book hundreds of millions of euros in profits, Lighthouse added.
“But these companies employ nobody and were taxed at less than one percent. Corporate tax rates in the UK and Ireland – where the profits would otherwise have been taxed – are 19% and 12.5% respectively.”
That’s not all. These companies then use this interest-free cash to give out interest-bearing loans to companies in their group based in Ireland and the UK. In turn, the loan-receiving companies pay interest to the companies in the tax havens, thereby reducing their taxable profits – and the amount of tax they pay – in Ireland and the UK.
But is it illegal?
Of course, one can argue this is all above board because the laws in the countries in which the schemes operate don’t explicitly outlaw this practice. Some would also say that this isn’t actually “aggressive tax avoidance”, pointing to worse culprits.
In fact, both ABP and Pilgrim’s Pride told the reporters they were fully tax compliant and followed the law in all jurisdictions where they operated.
Just because it’s not illegal doesn’t make it ethical - surely we all know this by now? But more important is the glaring hypocrisy. These companies are happy to benefit from a lopsided system that spends billions of taxpayer money to help farmers make ends meet, yet go the extra mile to prevent having to pay their fair share of taxation. Sure, it might be legal, but this isn’t how it’s meant to be.
Also, as an aside, just because there are companies who exhibit poorer behaviour does not mean these guys should not be called out.
The difference is particularly important at a time when Britain is facing its worst cost of living crisis in a generation, with more than half of its consumers having been affected by spiralling energy prices, rising inflation and increased rents, not to mention the continuing headaches associated with Brexit.
Here are articles based on findings from the investigation.
Big meat: Fat Subsidies, Thin Taxes (Lighthouse Reports). You can get more details on the investigation and the methods used here.
Revealed: world’s biggest meat firm appears to have avoided millions in UK tax (The Guardian)
Larry Goodman group uses obscure Dutch company to cut tax bill (Irish Times)
Follow The Money (Dutch publication, requires free registration to read the article)
Will the new UK Financial Bill allow banks to profit from hunger?
Margot and Ludo (my colleagues at Lighthouse) have been on a roll. While I was taking a summer break and travelling to the U.S. on an exchange programme, they partnered with openDemocracy to raise some serious concerns around the UK’s proposed Financial Services and Markets Bill, which would make it easier for investment banks to speculate on the price of commodities.
Already, the speculation boom has brought in billions in revenue to some of the world’s biggest investment banks. Lighthouse research showed that Goldman Sachs increased its fixed income and commodity and currency (FICC) division by £1.9 billion, while Morgan Stanley, the Bank of America, JP Morgan and Citi have all also seen revenue increases as a result of commodity trading.
But the proposed new bill would largely remove limits on the number of contracts that financial investors can hold in any given commodity. Limits that were imposed in the wake of the previous food crisis in 2008, which devastated millions of families.
Removing these rules would lead to “financiers dictating who gets to eat”, said Nick Dearden, director of campaign group Global Justice Now, which led the calls to introduce these rules after the 2008 crisis.
“One of the great under-reported drivers of the cost of living crisis is the role of the speculators pushing up food and energy prices for a quick buck,” he told openDemocracy.
According to the article, “Goldman Sachs and Citi Bank declined to comment for this article. Morgan Stanley, JP Morgan and Bank of America did not respond to requests for comment.”
Below is a thread on this issue, and here is the article on openDemocracy.
This also feels like vindication of our previous Hunger Profiteers investigation, which looked at whether excessive speculation was contributing to a spike in global commodity prices. The short answer is yes. For a longer one, check out this previous issue.
The White House turns its attention to hunger
On Wednesday, the Biden-Harris Administration hosted the White House Conference on Hunger, Nutrition, and Health, focusing on one of Biden’s goals - ending hunger in America by 2030.
Will it get there, considering many Republicans lawmakers seem to think they should oppose every issue the Democrats support? Your guess is as good as mine. But here are two good pieces on what went down and what could be the next steps forward.
Key takeaways from Biden's conference on hunger and nutrition in America (NPR)
The White House Conference: They Pulled It Off! (Marion Nestle)
As always, have a great weekend! Please feel free to share this post and send tips and thoughts on twitter @thinink, to my LinkedIn page or via e-mail thin@thin-ink.net.
Bangers And Tax
I don't come here enough, but thank you for your work.