I’m going to take a liberty a re-post a big part of someone else’s blog — partly because I know the author happily (and with my consent) does so with mine:
Yesterday morning I attended the Liberal Democrat treasury team meeting in my capacity as a parliamentary researcher. Paying a visit were some representatives from the banking sector, who were there to give high-profile members of the Liberal Democrats - the party currently at the forefront of attempts to close down tax havens, or secrecy jurisdictions as they are better termed - a bank’s eye view.
In the course of discussions, the issue of Tesco avoiding £millions in stamp duty arose. At this point, one of the bank representatives launched into a lecture which went roughly like this:
“Ever since stamp duty has existed, companies and individuals have tried to avoid paying it. After all, if registering in one place means you incur 4.5% stamp duty, and registering in another place means you incur 0.5% stamp duty, well companies will register in the latter. It’s just the way it works.”
I’m pleased to say that a high-profile member of the Lib Dem treasury team interrupted at this point, quite angrily, and replied:
“Don’t you get it? 99.9% of people on this planet can see that a company the size of Tesco using elaborate means to avoid paying taxes in the UK is just wrong. It’s wrong. Can you not see that?”
The bankers stared back, confused. No, they just couldn’t see it.
I know the author — who appears to be anonymous on the blog.
I believe the story is true.
You can guess the bank‚Ķit’s not hard.
You can probably guess the respondent too….
But the fact is that as yet the bakers just don’t get it.
They will, I promise you.
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Much though I would love to say w*nkers instaed of bankers I don’t think you should be calling them bakers. It’s not fair to insult such a noble calling- after all bread has been around for thousands of years! 🙂
Tax is not my area of expertise but there is one general question that keeps springing to mind. Looking back in time, if countries have dropped their tax rates have they seen decrease or increase in tax recovered or has it been the same? I mention this as an old colleague of mine mentioned, I think it was South Africa, as having experimented with lower rates many many years ago and ended up increasing their tax revenue. Perhaps if tax rates were dropped many companies and individuals wouldn’t seek out expensive tax planning structures which might also have a very detrimental effect on offshore finance centres and in turn would make Mr Murphy an extremely happy man. Just an idea.
There are plenty of companies that have structured themselves offshore. The Guardian for example is involved with/ own Cayman companies following their purchase of Emap.
Stuart
One of the best comments on here for a long time
We are amused!
Richard
John
There is not a shred of evidence that the Laffer curve to which you refer works.
But I agree – the Guardian made a serious error of judgement in using a Cayman company
Richard
Just banging on my people in glasses houses drum! If we’re going to have reform it has to be right across the board, a level playing field for all with no exception.
John
That level playing field is fine by me
I can assure you – the UK have no greater regard for me than have Jersey
I demand reform everywhere
Richard
“There is not a shred of evidence that the Laffer curve to which you refer works.”
Richard, why do you persist in perpetuating this falsehood? The Laffer Curve is a simple mathematical function, the only matter for debate is at what rate of tax the effect kicks in. I assume you would agree at 0% and 100% tax collected would be nil? It therefore follows there must be some point which maximises tax revenues.
Do you also accept that when Nigel Lawson cut the top rate from 60% to 40%, tax revenues increased? Not only did they increase, but the percentange of income tax paid by the richest 10% also increased. So you could argue that Lawson was a progressive Chancellor.
Now we’re agreeing on something!
@Richard Murphy
It is not a question of whether it works or not – it’s not a sausage machine! There are lots of examples of where it can be seen – Peter’s is a good example. What I don’t understand is why you persist with such a blinkered view of economics?
If lowering tax rates for the wealthiest individuals and companies increases the amount of tax they pay, why has there been sucn an increase in tax evasion and tax avoidance by these self same people in the last 30 years?
I’d love to see any evidence that the theory behind the Laffer curve is true. Please provide sources, links etc.