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Tag Archives: Tax

Frankie Boyle leaps to Vodafone’s defence

Remember the furore a few weeks ago, when Vodafone posted healthy profits but paid – gasp – no UK corporation tax?

Well, that left wing comedian firebrand Frankie Boyle – of all people – has come to their defence.

Granted, he probably wouldn’t see it that way.

However, let’s suppose that Vodafone’s CEO tweeted the following about the reasons for the zero tax bill:

We incurred the capital expenditure for reasons separate from tax and our accountants applied for tax relief on this.

You see, the main reason for Vodafone paying no corporation tax is that they had set a significant amount of capital expenditure against their taxable profits, by way of capital allowances and related reliefs*. Unless Frankie really thinks that all that investment in new tech and so on was just an elaborate tax dodge, then it is clear that Vodafone’s tax bill was reduced entirely legally, indeed using provisions set in place by Parliament.

Vodafone could have chosen not to claim the allowances, but why should they do that?

It’s a bit like Entrepreneurs’ Relief, which reduces the capital gains tax rate to 10% on distributions of reserves on the dissolution of a qualifying company – such as Frankie’s.

Frankie could have chosen to distribute those remaining reserves in his company as a dividend (paying around 36% income tax net) or even as salary (that’s just under 60%, including employer’s NI). But why should he do that?

Oh yes you do, mate. Go back a few years and you might remember the venture capitalists who pointed out that they were paying tax at a lower rate than the office cleaners. Yes, that was through treating income as capital (as you have) and using Business Asset Taper Relief – a forerunner to today’s Entrepreneurs’ Relief.**

So I applaud his use of legal means to reduce his tax bill – starve the beast and all that. The problem, for him, is that he is now clearly a hypocritical b-tard. Therefore I trust we’ll hear no more nonsense from him about tax dodging (blurring the distinction, as he and his fellow travellers do, between tax avoidance and evasion).

Pigs have evolved into a rather aerodynamic shape these days, haven’t they?

* See Christie for his usual excellent precis of the situation and demolition of yet another bunch of ‘financial’ ‘journalists’.

 

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7 Ways In Which Polly is Wrong

She’s at it again, giving the Grauniad all £110,000-worth of her wisdom. This time, it’s …

The tax and finances of every citizen must be open to public scrutiny

…Taxes are the price we pay for civilisation: soon that price must become a public declaration for all.

So, let us count the ways in which Polly is wrong. This might take a while…

1. The idea that confidentiality of tax affairs is somehow a ‘cheat’s charter’ is akin to the authoritarian’s ‘nothing to hide, nothing to fear’ argument – with all the corresponding ‘guilty until proven innocent’ and legal crystal ball gazing that it involves. Do we have to keep the bedroom curtains open when indulging in you-know-what, just so that everyone can see it’s consensual?

2. Exposing everyone’s tax affairs is a good thing because, quoth Polly:

Transparency underpins a culture of social justice and civic duty.

Rubbish – it underpins a culture of envy and spite and stirs up (often unjustified) antagonism, fuelled by financial and economic ignorance which is, of course, what socialism feeds off. It reinforces the sneering culture that would rather vandalise an expensive car than aspire to own it.

The ‘civic duty’ bit is code for embarrassing – or, more accurately, bullying – people into paying more than the law requires. Well, I am happy to make a prediction: that the number of Toynbee cheerleaders who publish their own tax affairs (in full) will be around the same number as those UKUncut followers who voluntarily sent extra dosh to HMRC.

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Competition Is Bad And Must Be Stopped, Says @RichardJMurphy

This ‘competition’ thing really must stop. We need a level playing field. It cannot be right that car maker A who produces, say, a better quality vehicle for the same price as car maker B, can then take so many of B’s customers. Or that maker C produces a less well-appointed car than maker D, charges a lot less for it, and again takes so much more market share.

What about, instead of buying a car from our choice of dozens of manufacturers, we simply acquire a car from any one of them and then the price we pay is ‘fairly’ apportioned between all the makers – regardless of who you actually ‘bought’ the car from?

Of course, the method of calculating this apportionment ‘would be a huge task’.

Yet we could then apply the same logic to, say, the supply of and payment for state-run services. Maybe something like this intellectual colossus of the economic firmamentsuggests:

… we can recalculate what Amazon should pay here in the UK using the unitary apportionment formula method of taxation …. We split the profit in accordance with a formula.

…we need radical corporation tax reform in the Uk and worldwide. IUnitary apportionment formula taxation stops tax haven abuse of countries like the UK.”

Multinational siting HQ in low tax country shocker!

By ‘tax haven abuse’ Murphy means, of course, tax competition, and naturally the EU leans towards the view that while competition in the private sector is a Good Thing (and it is), when it comes to themselves tax competition between countries is a Very Bad Thing. We must create and maintain the cartellevel playing field and all that.

Ritchie does have it right, briefly, here though:

… we need radical corporation tax reform in the Uk …

We do – we need to abolish it.

P.S. Christie, as ever, has also had a swipe.

“OK, but…” – Yes, It’s a George Osborne Speech #cpc11

In to the conference hall (my customary no-more-than-one visit to that glorified media briefing) to hear George Osborne’s contribution. It was a good speech from a technical point of view; it had a few jokes and he said what need to be said (S&P today reaffirming the UK’s AAA credit rating).

The Party has also learned a lesson from New Labour: that reannouncements work, as the morning’s headlines testified. Those in local government had it confirmed some time ago that the second year of the concil tax freeze was on, and so Labour were right that it was nothing new … but such details never stopped them when in government.

The interesting stuff was the small business ‘credit easing’ (is that a recognised term?) and the reigning back on the carbon emissions targets. The latter might also have the happy outcome of cheesing off Chris Huhne; as it was no doubt meant to, to keep us polar bear barbecuing right-wingers happy.

Yet just as with the Chancellor’s major parliamentary statements, such as the budget, the announcements among the cynical old timers could only lead to a muted “OK, good, but …”.

On small business lending, the banks are not avoiding lending because they can’t be bothered to take the time out from counting their bonuses and toasting their saviour Gordon Brown. Banks are nervous, quite probably over-cautious, and are looking to rebuild balance sheets and minimise the effects of any existing toxic debt. Presumably Osborne’s scheme, one way or another, will involve the government intervening in lending decisions (either by the banks or markets at large). Will they have available some secret font of wisdom as to whether businesses are being denied credit by a nervous bank, or if they are genuinely bad risks; be it because of poor management, business potential or more quantifiable matters such as collateral?

Having avoided the temptations of unfunded fiscal stimulus, an infrastructure bank or more direct means of forcing banks to lend, he must not, even unwittingly, spark the creation of another credit bubble.

Then we have the scaling back of the carbon emissions targets. Again, good on the face of it, but the acid test will be what effect it has on the climate change levy, fuel duties, feed-in-tariffs and carbon reduction commitment mechanisms, all of which are adding to living costs in the name of fighting climate change, sometimes with the most tenuous of justifications.

OK, that’ll do for now, back to the fringe guide to find something to eat before the Boris rally tonight.

‘Fessing up: George Monbiot in Receipt of the Proceeds of Tax Dodging.

en: Picture of George Monbiot at the Make Pove...

George Monbiot: Putting his head above the parapet

George Monbiot, hero of the watermelon greens and other trendy lefty causes, has published his ‘registry of interests‘.

Credit to him, as he is seeking to avoid accusations of hypocrisy by doing what so many of those he criticises should do. After all the environmentalist movement, for example, are often quick to discount opinions opposed to their own, on the grounds that such critics are in the pay of ‘big oil’ or ‘big business’ or whoever else is the bogeyman-du-jour. (Conveniently ignoring how many in their own ranks, supporting green taxes and regulation, are often in the pay of ‘big government’.)

Hypocrisy is a dangerous and infectious condition, though. George’s main income, unsurprisingly, is from the Grauniad – £62,007 to be precise, in the year to 30th September 2011. Nothing so remarkable about that. Equally unsurprisingly, a quick trawl even through George’s own archive reveals some very recent attacks on tax avoidance, something that many of his Farringdon Road colleagues also pontificate on.

So what? Well, let’s not forget that the Grauniad itself is something of an authority on the practice of tax avoidance – a.k.a. among the Left as ‘tax dodging’ – having practised it itself.

Nevertheless, one assumes George is happy to take money from this tax-dodging organisation. As the likes of UKUncut and their fellow left-wing travellers would regard this as a moral crime, is George really happy that he is benefiting from the proceeds of such activity?

Are his followers happy that he is in the pay of ‘big tax-dodgers’?

Yet perhaps we are being harsh on George. I’m sure he has levelled his criticisms of tax avoidance at his own newspaper as well, hasn’t he? After all, a man of principle would not be afraid of biting the hand that feeds him, would he? As Geroge himself says:

… I believe that journalists should live by the standards they demand of others

So, if anyone can find links to any relevant article, I’d be happy to append them here, lest it be thought that I’m accusing him of hypocrisy.

Admiral @RichardJMurphy: “I See No Laffer Curve”

Richard Murphy in an earlier life: "Ships? No such thing. What am I standing on? Oh."

It’s a long way yet from a flat rate tax, or even the flatter tax system that George Osborne mentioned some time ago, but the runes on the future of the ’50p’ tax band are promising.

The Treasury already know that it can be cut to 45% with little lost revenue. If that’s a carrot, the stick is the evidence that the high tax rates, both personal and corporate, are leading to emigration abroad, particularly from the City.

Now we would expect the news that bankers are leaving to be greeted with joy by the economically illiterate, but it seems even those who claim to be quite good with numbers and stuff are saying things like this:

It made him smile. That’s nice. Like seeing a Curry’s looted might please someone who has an ill-thought out gripe against the evils of corporate retail … until one day they realise that such businesses employ people and yes, even pay various taxes for schools’n’ospitals and things.

A Murphite then helpfully demonstrated their ignorance with this response:

That’s the trouble with Twitter; it’s short, quick and easy to post your thoughts without proof-reading or checking your logic. The 50p rate isn’t raising much … those liable to pay it are leaving to avoid it; perhaps the two are related?

As a dweller of the reality-based community then pointed out:

Now, where have we heard of that effect before? Raising taxes so far that they actually raise very little in additonal revenue, as people who can move do so, and others avoid it through other legal means (even including working less, since the marginal increase in take-home pay is worth less than the opportunity cost of the time spent earning it).

I’ll give Mr. Murphy a clue. This phenomenon starts with an ‘L’ and ends with ‘affer’. He won’t guess it though because, as he reminds us regularly, the Laffer Curve doesn’t exist. Strange, then, that even he and his union paymasters aren’t campaigning for a 100% flat tax to cure the deficit.

The EU Endorses International Price Fixing

Let’s imagine for a moment that there was a collection of large corporations which held monopolies, or at least pretty unassailably dominant positions, in a number of key markets in their respective countries.

In each of their home territories these companies had the ruling politicians, and much of the opposition, on their payroll.

Abusing their monopolistic positions they were delivering poor quality services to customers who had little other choice but to take such services, and so they were able to charge pretty much whatever they felt like.

You would think that such corporations would be the target of some ire, not least among the Left. There would be calls to break up these organisations. They would be held up as an example of the ugly face of capitalism and certainly, in the current times, UKUncut and their fellow soap-dodging travellers would be occupying their branches, boycotting their businesses, marching and violently smashing their way to “social justice”. The intelligentsia and self-appointed experts would opine about the morality of such companies and what should be done to cut them down to size.

Then, as if to rub salt into a fatal wound, these companies openly colluded to fix prices across the EU. Those more enlightened businesses who saw an opportunity to benefit, by not going along with the racket, were bullied into line. Would you not expect – be you of the Left or Right – something to be done?

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@RichardJMurphy Bemused By Display Of Principles

I won’t say that Richard Murphy, the black sheep of the accountancy profession, has lost it: for as any regular reader of his (or indeed any follower of Tim Worstall will realise) that train left the station some years ago, the track has since been ripped up on Dr Beeching’s orders, the platform has now gone to grass and even the railway preservation societies aren’t interested.

However, this morning we have yet another reminder of just why only the likes of the BBC among the mainstream media still seek his opinion on anything.

Are the Tea Party the political equivalent of suicide bombers?

Yes, that really was the headline. No attention grabbing there then.

Let me stress, straight away, I’m not suggesting the Tea Party are physical terrorists.

Fear not, I wasn’t about to fall into that elephant trap.

Suicide bombing changed the whole environment of terrorism. Suddenly we faced people for whom what had been presumed to be the ultimate deterrent – risk of their own death – held no threat….

The Tea Party may be politically similar.

Wipe the coffee off your screen, you’ll have to get used to this sort of thing.
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If Tax Relief Is A Bad Subsidy, Would The Unions Abolish Gift Aid?

The PCS and their brethren in other unions really should consult someone else on tax issues, because clearly their current advisor isn’t up to it….

Taxpayers ‘subsidise’ private pensions
THE leader of one of the unions that went out on strike over planned changes to their pensions last week has challenged claims that public sector workers are being unfairly subsidised by those in private schemes.

Mary Bousted, the general secretary of the Association of Teachers and Lecturers, pointed out that taxpayers funded private sector pensions to the tune of £37.6 billion in 2007-8, the most recent year for which figures are available, through subsidies and tax reliefs.

“When you consider the amount paid out that year in private sector pensions was £35bn, the total paid in private sector pensions was actually subsidised by the state.”

RTWT, if you have a dark, ironic sense of humour and fancy a laugh.

All this follows what the PCS have said in their “Facts [sic] about civil and public services”:

Myth 2: civil service pensions are ‘gold plated’

Two and a half times as much public sector money is spent subsidising private sector pensions through tax relief than paying for public sector pensions – 60% of this goes to earners at the higher rate.

Now let’s get this straight: Tax relief is relief from a tax liability. By definition, you have to be paying tax in order to get it. A subsidy is where one is a net recipient of funds from the Treasury. Thus tax relief simply cannot be a subsidy, whether it’s relief on pension contributions, loss relief, gift aid or good old MIRAS (RIP). (In the few cases where there is a relief of more than 100% – such as on R&D – then it’s generally a tax credit.)

What that naturally means is that those who are liable for more tax – i.e. higher earners – will be the greater beneficiaries of this ‘bad subsidy’. The answer is simple: reduce taxes and you will reduce tax relief … as the charity sector found out to it’s cost when Gordon Brown (who, I seem to remember was a caring socialist) reduced the basic rate of tax to 20%.

There is also a reciprocal principle with pensions. You get relief on the contributions, but when the pension fund pays out the income is taxable. So the PCS whining about the amount “spent” on relief ignores the tax that is collected on post-retirement payouts. (My professional colleague Christie Malry did a good job of expanding on this point last year.) One could call it “public investment in the future” or something.

So, if the PCS and their piper Richard Murphy really want to avoid spitting feathers over companies that pay “no tax” because they are carrying forward tax losses, or fat cats getting 40% or more tax relief on pension contributions, then to be fair – which I’m sure they would say they are – they would have to (a) not tax profits, (b) not tax pension payments when one retires and (c) abolish gift aid … all for starters.

Yes, daft isn’t it? And to think the PCS represents the people who run the tax system.

Nick and Cut

Coming soon on the free-to-air BBC:

The BBC’s Nick Robinson reveals what happened when the residents of an ordinary street in Lancashire had to run everything for themselves .

Ponder instead how you’d do if you had to run not the whole country but just your own street.

What if you didn’t have a budget but each house had to decide how much to spend on what?

Like a budget, then.

What if you had to organise and pay for the everyday things we take for granted: the bin collection, the recycling, the street lights

Errm, we already pay for them.  This is sounding like it was written by someone who works where other people pay for everything.

If so, come and join me on The Street That Cut Everything – that’s the title of a programme to be shown on BBC1 next week.

The residents weren’t paid for taking part, but they were given back their council tax money for those six weeks to spend – not on themselves but on the needs of their community.

OK, but council tax only accounts for typically a quarter to a third of councils’ income. Why not given them back three times that much to make it more realistic?

You might think that life wouldn’t change that much if the council closed down…

Shift workers woke early to find their street in total darkness…

Not quite “without government the sun wouldn’t rise”, but close.

Children emerged earlier than usual. They could no longer get the bus to school

Because bus services can only be run by councils, you know.

Those who fancied a trip to the local leisure centre to get away from the rubbish and the endless meetings and the cameras found their way barred: it’s run by the council.

… and so on.

I know that some will assert that the programme’s title shows that the BBC has an anti-cuts agenda.

Not just the title, Nick, but anyway … admittedly it would be difficult to believe that the state funded BBC could produce such a programme without having, if not an anti-cuts agenda, then certainly a pro-statist one. Thus so it would seem, with it peddling the idea that such services as leisure centres could not exist without the council to run them. It is part of the wider mindset that if the state doesn’t do it, then no-one will do it. They used to think that about telephone networks once.

Naturally the experiment, from the sound of it, will bear little resemblance to what a properly organised scaling-back of government services, replaced by community-organised efforts stretching beyond a cul-de-sac could achieve (given enough of a lead time). Nor do most, even of the classical liberal tendency, seriously suggest that there should be no government, as the “you libertarians ought to try living in Somalia” commentators from the collectivist Left might like to suggest.

However, whatever the institutional bias at play, it should be an interesting examination of ordinary council taxpayers people’s ideas about (local) government and the work of politicians, council officers and staff. I will reserve my final judgement (for what it is worth!), until then.

Of course, if it’s successful they could always make a sequel; how about a street that did without the BBC …