Daveed Reviews

Call Them by Their Real Names: Frauds

Bono, Preacher on Poverty, Tarnishes Halo With Irish Tax Move

By Fergal O'Brien
Oct. 16 (Bloomberg) -- Bono, the rock star and campaigner against Third World debt, is asking the Irish government to contribute more to Africa. At the same time, he's reducing tax payments that could help fund that aid.
After Ireland said it would scrap a break that lets musicians and artists avoid paying taxes on royalties, Bono and his U2 bandmates earlier this year moved their music publishing company to the Netherlands. The Dublin group, which Forbes estimates earned $110 million in 2005, will pay about 5 percent tax on their royalties, less than half the Irish rate.
``Among the wealthiest people I suppose it's the norm,'' Jill Cassidy, 23, said on South King Street near a plaque marking the site of Dublin's Dandelion market, where U2 played some of its earliest concerts. ``In U2's position, it does come across as quite hypocritical.''
The tax move has tainted the image of Bono, nominated for the Nobel Peace Prize, and U2 at home. Now promoting a new DVD, book and album, the band is fighting back. Lead guitarist David Evans, known as The Edge, earlier this month defended the publishing company's move as a sensible decision for a group that makes 90 percent of its money outside Ireland.
``Our business is a very complex business,'' Evans said Oct. 2 on Dublin radio station Newstalk, breaking the band's silence after weeks of public criticism. ``Of course we're trying to be tax-efficient. Who doesn't want to be tax-efficient?''
As residents of Ireland, members of U2 remain liable for personal income taxes. Any Irish-based companies they control will pay taxes on their profits.
`Poor Example'
Principle Management, U2's management company, declined to comment when Bloomberg asked for a statement from Bono.
Dublin-born Bono has been mentioned as a candidate for Nobel Peace Prize since 2003. The Norwegian Nobel Committee on Oct. 13 awarded the 2006 prize to Bangladeshi banker Muhammad Yunus and Grameen Bank for advancing social and economic development by giving loans to the poor.
Bono, 46, has toured Africa, established the pressure group Debt AIDS Trade Africa and become one of the most vocal supporters of the Make Poverty History campaign. In July 2005, he helped persuade world leaders to double aid for Africa to $50 billion a year by 2010 and erase the debt of the 18 poorest countries on the continent.
``I can see no connection between what he is doing and Make Poverty History,'' said Richard Murphy, a director at U.K.-based Tax Research Ltd. and author of a book called ``Money Matters: Artist's Financial Guide.'' ``He is setting a poor example by his tax affairs.''
`Creative' Income
At a concert last year in Croke Park, Dublin's biggest stadium, Bono appealed to Prime Minister Bertie Ahern to raise overseas aid to 0.7 percent of gross national product by 2007 from 0.5 percent now. The crowd responded by booing Ahern.
The political catcalls have now turned on Bono, whose real name is Paul Hewson.
``It seems odd, in a situation where they enjoy an already favorable tax regime, they would move operations to the Netherlands to get an even more favorable rate,'' said Joan Burton, finance spokeswoman for the opposition Labour Party.
For years, Bono and U2 got a better deal than most Irish taxpayers because songwriters paid no tax on earnings from music publishing. That will change next year, when Ireland limits the tax exemption, which also applies to writers and artists. From Jan. 1, artists that make more than 500,000 euros ($625,450) will pay tax on half their ``creative'' income, according to Ireland's Revenue Authority.
Remaining in Ireland would have forced Bono to pay a 42 percent tax on such earnings. Alternatively, the band could have channeled profits through a company to pay the 12.5 percent corporation tax.
Millennium Goals
Wealthy individuals have put about $11.5 trillion in tax havens around the world, according to a 2005 paper by the London- based Tax Justice Network. Unpaid taxes on those assets could amount to $255 billion, the paper said.
``That's five times the amount needed to achieve the Millennium Development Goals, which Bono says he's really interested in,'' Murphy said, referring to a United Nations plan to eradicate poverty and combat the spread of AIDS. ``My answer is, put your money where your mouth is.''
Some fans accept the band's explanation of its tax planning because U2 has been generous in the past.
``They've paid plenty of money up to now,'' said Peter Cooper, 58, who lives in Bray, near Bono's home in Dalkey. ``I think they are quite right'' to move the company abroad.
Paul McGuinness, the band's manager, said in the Oct. 4 issue of the music magazine Hot Press that Ireland itself had benefited from low taxes. The country's 12.5 percent profit tax - - half the European Union average -- has helped Ireland lure investment from companies such as Intel Corp. and Dell Inc.
That reasoning has done little to help Bono ease criticism of the tax move.
``I don't think it's justified,'' said Sean Lynch, a 28- year-old artist. ``Social conscience is the thing I would like to address to them.''

posted by daveed @ 2.11.06