Vir Cantium

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Monthly Archives: May 2009

Dictator Ignores UN Shock!

choc_teapotSo starts a week of stern looking diplomatics scurrying around wringing their hands issubing condemnations and expressions of “grave concern”.

Just like they did over Zimbabwe, and just like they will over Iran when the mad mullahs carry out their testing (assuming this isn’t all a joint venture between Tehran and Pyongyang). The sceptre of the League of Nations still hangs on the air after all these years.

Unsuprisingly, Kim Jong Il seems unconcerned about the chattering in New York. Though I’m not an expert by any means, it seems that the lynchpin in all this will be Bejing. What is China’s interest in supporting a nuclear North Korea? Will it actually force them to keep Jong Il on a tighter leash, lest he trigger a tit for tat exchange, ultimately between the US and China?

In the meantime, Obama is looking to intercept ships heading to North Korea carrying WMDs – students of world events of 1962 will be particularly interested in that one. Might be worth watching the sea lanes between the Arabian Gulf and South China Sea …


You Couldn’t Make It Up (No. 42)

Like most people, I am not keen on wasting time sitting in traffic jams. Therefore I’ve decided that I must have a dedicated lane for myself, John Prescott style, between my home and the Civic Centre – paid for, of course, by the taxpayer. Since I can’t get it on expenses (ah yes, councillors’ expenses: not as exciting as you might think) I am going to have to develop a “psychological aversion” to waiting in traffic. That’ll work. Not.

However, that is the justification for the additional demand for more sites for travellers and gypsies, which feed into proposed new targets that could be incorporated into the London Plan. This is over and above existing demand arising from overcrowded sites, “unauthorised encampments” and the like. The definition of this additional demand for gypsy and traveller sites comes straight from government guidance which defines such need as – and I quote – “a psychological aversion to bricks and mortar housing”. Quite how such finicky tastes in architecture can carry such weight in the formulation of housing strategy is beyond me, since I suspect the preference isn’t likely to be for trendy glass and steel, wattle and daub or “green” methods of construction.

I’d like to think, in my innocence, that someone in the civil service has an ironic sense of humour, and put the definition into a draft document in a facetious vein. Sadly, however, the civil service doesn’t do humour, so it stayed in, and thus will probably generate a goodly amount of work for both the equalities and town planning industry for years to come.

The research that gave rise to the targets was commissioned via the pre-Boris Greater London Authority, and it may be too much to hope that any post-May 2008 purge has reached as far into the beast as to remove those Livingstone-ites responsible, so once again we in the Boroughs must man the barricades.

I’ve left the best ‘til last, though: there has been no public consultation on the proposed targets. Even the London Borough councils have not been invited to comment. Instead the targets and their questionable justification will be buried incorporated into the draft London Plan which will, of course, be consulted upon, along with the myriad of other issues that it throws up, such as green belt, housing densities, parking standards, and so on. It’s quite possible that the first time the ordinary resident becomes acquainted with the “psychological aversion to bricks and mortar housing” will be when a groups of sufferers set up on a previously green field near their home, and the planning inspector allows it to carry on, because targets have to be met.

MP Expenses – the Fallout for the Man in the Street

So, various MPs from all sides (even the Lib Dems, who like to think they’re in the middle rather than to the left of Labour, as they actually are) have been caught with their snouts in the trough. Cue much hand wringing, squealing, weasel words and sudden discoveries of consciences. Oh, and an awful lot of blog posts and column inches.

Only good can come of this in the long term, surely? Like pruning, there may be apparent damage in the short term, but the plant – democracy in this case – will grow stronger as a result.

Well, sort of. What about the ordinary taxpayer? Fine, we the Treasury will get our money back, but what are the wider implications?

Let’s look at the so-called “flipping” of second and main homes. Some of the flipping has been contrived, for sure. Some has been genuine. The point is that flipping, in terms of capital gains tax (CGT) – which is the other taxpayer interest in the scandal, alongside the expenses claims themselves – is not restricted to just MPs. Anyone with two “homes” can switch the “only or main residence” (aka “Principle Private Residence”) nomination, thus taking advantage of various exemptions from CGT, which have survived while other areas of tax avoidance have been pursued as if those practising it were not far removed from the followers of Gary Glitter’s chosen hobby.

In the last few days the government has made noises about dealing with flipping and CGT – after all, the Finance Bill is progressing through the legislative process, so it could be done fairly quickly. MPs may still have the audacity to do nothing, or even to amend any anti-avoidance measures, but it is quite possible that the rules around flipping, as they are used by ordinary taxpayers, may still be tightened up. You may not have much sympathy with those who would lose out (even if they are, say, those who have inherited a second home but cannot sell it), but has the principle set out in IRC v Duke of Westminster (1936) – applicable to us all – not been eroded enough?

“… every man is entitled, if he can, to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be.”

After all, isn’t tax avoidance about playing by the rules but not in the spirit?

Yet there is also the wider question of expenses that have been declared as “wholly, exclusively and necessarily in the course of duties” per the Green Book. Many ordinary taxpayers will be familiar with the phrase as it underpins the rules around what employees can be reimbursed for without it counting as taxable income. Indeed, the great unwashed are penalised even further, finding that even fares or mileage between home and work cannot be reimbursed tax free, or claimed for tax relief.

This, at least is where the taxpayers may gain a benefit. Not that the rules will be relaxed for everyone – as if! Rather, with all the information now in the public domain, the length and costs of all those tax enquiries should be mitigated, and the new harsher penalty regime will bring in a few bob.

A Little Knowledge

It may seem a bit behind the times to be commenting on the Budget, now over two weeks’ ago – but as any accountant will tell you, the least reliable way to try and work out what’s in the Finance Bill is to listen to the Chancellor’s speech. In any case, I’ve been on paternity leave, so there.

Now then, if you will bear with me for a short technical bit, we come to the new provisions for pension contribution tax relief for the “rich”.

Until 22nd April, someone earning, say, £200,000 a year could put up to £200,000 into their pension fund that year and get tax relief at 40% – their marginal tax rate*. After 22nd April, of course, anyone earning more than £100,000 is a disciple of the devil and must be squeezed until the demons are exorcised (or emigrate). So from April next year, those on much more than £150,000 per year will only get 20% relief on their pension contributions – and that’s quite a loss (£40,000 on a £200,000 contribution).

So, suppose you were in the higher echelon of earners – say, an MP or maybe even a minister – and wanted to get in before the new rules come into effect. You might suddenly whack in a big lump sum into your pension now before the government shut the door.

But the Treasury has thought of that, and special rules came into effect from Budget Day to stop such “forestalling” measures. So that’s that. You’re stuffed.

Except …

You are, as I mentioned earlier, an MP. As it happens, you are a Labour MP and on the Monday, two days before Budget Day, you contact your financial adviser and put £400,000 into your pension – something you wouldn’t be able to do the following week without losing £80,000 in tax relief.

Not that you’re doing anything akin to insider trading – it was pure coincidence, of course.

And don’t let anyone tell you otherwise. Move along now, nothing to see here.

P.S. As that Labour MP, you will no doubt be aware that you can do the decent thing and get a refund of said contribution – though that might not stop the grubby details coming out….

* (Pedantic note: Technically they could put up to £245,000 if they have enough relevant earnings.)

First They Came for the Racists

It seems that Jacqui Smith has today made an attempt to get herself some positive publicity for a change take the heat off Gordon justify her government’s authoritarian fetishes by publishing a not-so-little list of those who have been banned from the UK for “preaching hate” or somesuch.

Sadly, judging by the callers on Jeremy Vine’s programme on Radio 2 today, many were quite happy to be banning people from our land based on them having the temerity to practise the right of free speech.

Now, just because “I will defend to the death their right to say” whatever nutty, wacky or plain offensive things they might say doesn’t mean I don’t support the caveat that incitement to violence should not be punishable. Such a distinction served us well for many years before Labour decided to criminalise the expression of certain views they didn’t agree with.

Depressingly, from the general public, came comments like “we are a nation of tolerance, so it’s right to ban people with these sorts of views” without, it seems, a hint of irony. Or “people died for our freedoms, so we should allow those preaching hate to come here an threaten those freedoms”.

Oh dear. Yes, many did die for our freedoms, and will continue to do so, but if anyone thinks that we should be embarking further down that slippery slope to frogmarching off those whose views, while distasteful though not advocating violence, we don’t agree with, cherry picking those who think the right way, then I think it is they who are in the wrong country.

Today, “preaching hate”, tomorrow, “denigrating vulnerable groups”? Just don’t say I didn’t warn you.