Tax Research UK

1.38 million people are underemployed in the UK

May 162012

TUC analysis published today using official figures, shows that the number of men doing part-time jobs because they can’t find full-time work more than doubled to nearly 600,000 between December 2007 and December 2011. The number of under-employed women has increased by 74% to 780,000, bringing the total number of people in involuntary part-time work to a record 1.38 million.

The proportion of women working part-time that don’t want a full-time job, often because of family and caring responsibilities, has also been falling. This shows that the recent rise in part-time employment has mainly come about through necessity rather than choice.

Number of people doing part-time work because couldn’t find full-time jobs,Q4 2011 (by region and gender)

(Quarterly Labour Force Survey, October – December, 2011)

When this crisis began I said 4 million people would be unemployed as a result of it.

Add together the unemployed and underemployed now and we’re there – and it’s only going to get worse.

Why’s Bob Geldof so tetchy about his tax affairs?

Tax avoidance, Uncategorized 3 Responses »

May 162012

The Week has a fascinating report, from which I borrow the following (edited) highlights:

BOB GELDOF lashed out at a reporter this week after he was asked about his tax arrangements, bizarrely demanding to know how many irrigation ditches her salary had built.

Geldof, who was in the Ethiopian capital Addis Ababa for the World Economic Forum, was interviewed by Times journalist Lucy Bannerman. Their encounter appeared to go very well at first, with Geldof talking about the huge changes that have taken place in Africa since Live Aid in 1985.

Then Bannerman asked him about his tax status. After confirming that he is a non-dom and can legally avoid income and capital gains tax on international earnings, Geldof laughed off the Sunday Times Rich List estimate of his worth (£32 million).

When pressed on how much tax he actually paid – the justification for the question being because his big idea, aid, can come from taxes – Geldof exploded.

“I pay all my taxes,” he shouted. “My time? Is that not a tax? I employ 500 people. I have created business for the UK government. I have given my ideas. I have given half my life to this.”

In a bizarre, heated exchange Geldof jabbed his finger repeatedly at Bannerman and demanded to know how many irrigation ditches she had built with her salary.

The tirade ended with Geldof yelling: “How dare you lecture me about morals”, before being led away by his entourage.

Actually Bob, lots of us would like to lecture you on your tax morals if you don’t pay in full what somebody else living in the UK might owe. I stress we don’t know whether you do or not, but you had the option of saying you do and got angry instead, which makes me think you’ve got something to get angry about.

And candidly, in that case Lucy Bannerman was absolutely right to question you as she did. Paying tax in the right place at the right time is a principle inextricably linked to solving the problems of poverty in Africa – and elsewhere. You can build as many ditches as you like. But candidly if you set an example by tax avoiding then you undo all your good works.

It’s your choice though Bob. You’ve no need to get angry. You can just either drop the non-dom claim or pay up instead. It’s not hard.

Did the French bond markets collapse when Francoise Hollande was elected?

Economics No Responses »

May 162012

Michael Burke has noted in the Socialist Economic Bulletin:

The victory of Francois Hollande in the French Presidential contest provides a further insight into the operation of the bond markets. It is frequently argued that there can be no retreat from ‘austerity’, which in reality is simply the transfer of incomes from labour and the poor to capital and the rich, because the bond markets will recoil and long-term interest rates will soar. This is important as significantly higher long-term interest rates could, unchecked, choke off recovery.

As the new French President has made some gestures in the direction away from ‘austerity’, then it should be expected that at least French long-term interest rates would rise as a result. But French government bond yields have fallen since the Socialist victory, by 18bps (basis points, equivalent to one hundredth of a percentage point, or 0.18 per cent). Ten-year French government bond yields declined to 2.79 per cent, lower than before the election.

So much for the markets will run away from austerity. As Michael notes:

The repeated assertion that pro-growth policies cannot be adopted because of the negative reaction of the bond markets is a false one.

The Green New Deal Group and the Euro Crisis

Economics, Green New Deal No Responses »

May 162012

It’s shameful when I did not notice a letter from the Green New Deal group in the Guardian this morning:

Ed Balls and Peter Mandelson are right, the UK should take a central role in ensuring a future of sustainable growth for the EU, with the funding of infrastructure being centre-stage. The crucial question is what kind of infrastructure. To make Europe’s future a “sustainable” one in an environmental sense will mean rejecting the usual old vanity projects of motorways, airports and high-speed trains. A really job-generating but green infrastructure programme would make all buildings energy-efficient, massively reduce use of raw materials through reuse and recycling, and improve regional transport networks. All this could generate jobs and business opportunities where people live, rejuvenate local economies and so eventually reduce public debt. If François Hollande and the Greeks’ Syriza alliance also call for a shift from austerity to greener prosperity, this could at last result in the replacement of the sado-monetarist lunatics in charge of the EU asylum.
Colin Hines
Convener, Green New Deal Group

Unless we close down tax havens we’ll never regulate capitalism or save democracy

Uncategorized 4 Responses »

May 162012

From the letters page of the Guardian this morning:

The euro is a great concept but was badly conceived, without a central bank or political, fiscal and economic harmonisation. But the greatest problem today is how to manage state finances when billions disappear into the world’s tax havens thanks to the absence of any monetary controls and politicians granting their wealthy friends and multinationals all kinds of tax advantages and favours that have diluted tax revenues to the point where there is not enough in the kitty to maintain public services.

Even Paul Krugman has admitted that a return to temporary monetary controls could be an answer. With regard to Greece I would say that, in exchange for handing over more money, all Greek funds abroad in Switzerland or elsewhere must be returned. Then the same conditions should apply to the rest of Europe’s member states. According to the Tax Justice Network, over a trillion dollars lies in offshore banks and companies in tax havens. Recover this money and governments could not only reduce their debts but pave the way for a lowering of taxes across the board to encourage investment and growth, and increase spending power for the majority.
Peter Fieldman
Madrid

Actually, we think there are about $$11.5 trillion dollars in tax havens. It may well be more.

But Peter Fieldman is right: tax havens were deliberately created to subvert regulation. I call them secrecy jurisdictions. Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain. That regulation is designed to undermine the legislation or regulation of another jurisdiction. To facilitate its use secrecy jurisdictions also create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.

Unless we tackle that abuse we can’t win the fight against abuse, and nor can we preserve democracy.

The biggest proponents of tax havens world wide are the Big 4 firms of accountants. That’s why I said yesterday:

I’ve long argued the four biggest threats to democracy in the world are PWC, KPMG, Deloitte and Ernst & Young because they are, together, the biggest global network designed to undermine the revenues of democratically elected governments with intent to ensure that those governments can’t command the resources needed to deliver the services their electorates want and expect which action on their part has to surely undermine democracy and faith in it faster than anything else could.

These firms are, literally, by promoting these places taking away our democratic freedoms. FT columnists realise that. It’s time it was more widely recognised.

Does capitalism kill love?

Economics 1 Response »

May 162012

I was given a bag with the following on it after my talk in Frome last night. The bag was , apparently, produced locally and seems to correctly reflect the sentiment of some (maybe many) in the town:

We had a really good discussion about what capitalism was during the evening. I have to say in my version of capitalism – where it is accountable, regulated and works in partnership with government in a truly mixed economy as described in the Courageous State (see right) then capitalism would not kill love.

But this morning David Cameron is apparently set on another £25 billion of benefit cuts. That’s not just killing love. That will, quite literally, kill people.

In which case the person who designed the bag may well be right.

Either way, my thanks to those who organised and took part in a great debate last night.

The government’s way to make it easier to tax avoid

Tax avoidance 1 Response »

May 162012

I loved the following extract from the Tax Journal, based on Monday night’s Panorama:

Most tax avoidance would not be caught by the government’s proposed general anti-abuse rule, Graham Black, President of the Association of Revenue and Customs, told Panorama. ‘It’s rather as if you legalise murder and then say that your crime statistics have fallen,’ he said.

Graham is exactly right. Graham Aaranson’s GAAR is, I now realise, a great gift to the tax avoidance industry because by not being a GAAR at all (Aaronson says it isn’t) and by tackling only a tiny minority of the very worst schemes (as Aaranson says it is the most it will do) it provides a fig leaf of respectability for the tax avoidance industry because it will let them claim that thee is a GAAR and their scheme does not fall within it so it must be all right.

No wonder the Chartered Institute of Tax is so keen to say the tax system is suddenly just hunky dory. They’re laughing al the way to Cayman, Jersey, Switzerland and Singapore.

The fight against austerity is the fight against fascism

Economics 5 Responses »

May 162012

Marcus Miller and Robert Skidelsky ask in the FT this morning how Keynes would have solved the Greek / Euro crisis. As they observe:

Underpinning the German position is the belief that resolving debt problems is the sole responsibility of the debtor. Keynes, by contrast, held that both creditors and debtors should share the task of getting economies out of holes they had jointly dug. “The absolutists of contract,” he wrote in 1923, “are the real parents of revolution.”

As they also note:

Talks to form a Greek government have collapsed. This is unsurprising: no government pledged to unalloyed austerity in response to its debt obligations can face its voters with confidence.

Yet Greece is only an extreme example. Centrist governments across the Mediterranean are increasingly seen by their citizens as powerless. They have no independent monetary policy; no capacity to devalue; no right to impose capital controls; limited ability to support failing national enterprises; and now they are mandated to tighten fiscal policy. When moderation fails, the time comes for citizens to turn to those promising to take power into their hands, be they from the right or the left – anything but the pusillanimous centre!

And as they warn:

That is what happened in the 1930s. It is a historical irony that European countries that avoided a repeat of the Great Depression after the banking crisis are now driving into the blind cul-de-sac that led to extremism in that earlier disaster. German historical memory has vivid recall of the hyperinflation of 1920-23. But it is possible to forget it was deflation and the Great Depression that brought Hitler to power in 1933.

I have no doubt they’re right. The Merkel line will lead to extremism. As a democrat it’s why I think the Left ha to be bold now in fighting the combined right wing and big business alliance that will deliver fascism if the current approach to austerity is sustained.

There’s support for the view elsewhere in the FT. As John Kay argues today:

The elevation of credibility into a central economic doctrine has turned a sensible point – that policy stability is good for both business and households – into a dogma that endangers stability. The credibility the models describe is impossible in a democracy. Worse, the attempt to achieve it threatens democracy. Pasok, the established party of the Greek left, lost votes to the moderate Democratic Left and more extreme Syriza party because it committed to seeing austerity measures through. Now the Democratic Left cannot commit to that package because it would lose to Syriza if it did. The UK’s Liberal Democrats, by making such a deal, have suffered electoral disaster. The more comprehensive the coalition supporting unpalatable policies, the more votes will go to extremists who reject them.

The writings of these eminent thinkers, and Martin Wolf to whom Kay refers, could not be clearer. We change our economic policies or extremism – most likely in the form of fascism – will result.

That’s how big the stakes are now – and brave people are even willing to say so in the FT.

It’s time to listen.

Can the police, doctors, nurses and teachers all be wrong?

Politics 4 Responses »

May 162012

According to the Guardian:

The home secretary is “on the precipice of destroying a police service that is admired throughout the world”, the Police Federation will warn her when she addresses their annual conference.

The doctors think the same of Lansley.

As do nurses.

And teachers think that of Gove.

Can they all be wrong? I doubt it.

In that case is this cock up or conspiracy?

I’d say neither. The aim is to destroy these services so that they can be privatised. Big business in the UK may be sitting on £700 billion in cash it has no clue what to do with at present. It can see no investment opportunity for the money, on which as a result – as any saver knows – it is making remarkably little return. In the absence of any idea how to make that additional return big business wants to get its hands on the securest income stream in the UK – tax revenue – and it can do that by winning private contracts to delve public service.

Of course they’ll provide a worse service than the state, and they’ll suppress wages and pensions in the process: that’s the business model they’ll knowingly use. But they’ll get rich and that’s all they and the Tories care about.

In that case this is neither cock or nor conspiracy. It could be called a plan, but that would be kind to it. A heist might be the best description. It’s the most massive theft of well being from the majority to feed corporate greed in the history of this country and the Tories, knowing they’re a one term government and even trying to hide the fact.