FT.com / Companies / Banks – HSBC retreats on chief’s pay award.
The FT notes:
HSBC has yielded to shareholder protests and backed away from controversial plans to award its chief executive, Michael Geoghegan, a substantial rise in his base salary of more than one third.
Now how about doing the same for the rest of the bankers’ pay?
FT.com / Technology – Google in Brussels antitrust inquiry.
The European Commission has launched a preliminary antitrust investigation into Google’s search engine and its search-advertising service.
How about an inquiry into its tax affairs as well?
FT.com / Columnists / John Kay – Iceland should stand up to shameful bullying .
John Kay makes this powerful point:
When Scotland’s two largest banks were rescued in 2008, their combined gross liabilities totalled more than half a million pounds for each man, woman and child in the country. Most Scots do not have half a million pounds; indeed, many Scots will not earn half a million pounds in their entire working lives. But this does not matter, since the sum is irrelevant. The liabilities of the Scottish banks are plainly not liabilities of the Scottish population, either legally or morally. This would not change one bit if Scotland had an independent government. These points are so obvious that they should hardly need to be made.
Except that the people of Iceland are being asked to pay for the losses of people from the UK and the Netherlands who used banks incorporated in that small state – even though the people of Iceland have also lost enormously from the failure of those same banks.
As John Kay puts it:
Our rationale for bullying the people of Iceland is the rationale of all bullies: we are doing it because we can. Or because we thought we could. Now Iceland again has the upper hand. If the vote on March 6 goes ahead the public will be given its first opportunity to reject the claim that it must take financial responsibility for the failures of banks and bankers. That will be a game-changing event, which is why Britain and Holland are negotiating. We should be ashamed of ourselves.
Quite so.
I hope the people of Iceland vote ‘no’ to any deal: any other outcome would be a gross injustice and a recipe for continuing abuse by banks worldwide.
The UK and the Netherlands should have regulated these banks; should have realised that the interest rates they offered were as clear a distress signal as those that Northern Rock offered and closed all of them down. They didn’t. That was our fault, not Iceland’s. Now let’s accept it.
Surely the lessons of Germany in the 1920s have taught us reparations don’t work?
FT.com / Lex / Finance & governance – UK superfast broadband.
Business says the UK must invest in infrastructure to ensure it is competitve in the future.
Business says it does not want to pay the taxes to ensure this is the case.
The government prposes a small tax that is highly regressive to deliver IT infrastructure reform.
Business and its representatives say they do not want it.
Does business have any clue about what it wants and how to pay for it?
AstraZeneca agrees to pay £505m to settle UK tax dispute | Business | guardian.co.uk .
As the Guardian notes:
AstraZeneca, the Anglo-Swedish drugs group today agreed to pay £505m to the British tax authorities in a move that could have far-reaching implications for other UK multinationals.
The pharmaceuticals company agreed to foot the bill in a case that involves the complex system of inter-company tax accounting known as transfer pricing, which enables companies to book profits from a subsidiary in a high-tax area to one in a low-tax jurisdiction, minimising tax payments.
I’m well aware Astra have long declared their innocence on these issues: not so it seems. The case adds to a string of successes on this issue for HM Revenue & Customs.
For Astra it’s an embarrassment. As the Guardian notes:
AstraZeneca said: “We draw a distinction between tax planning using artificial structures and optimising tax treatment of business transactions, and we only engage in the latter.” The company denied any wrongdoing.
I don’t dispute the wrong doing bit, but it clearly was not tax compliant in the opinion of HMRC. Tax compliance is seeking to pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes.
This is, of course an issue I have long been involved in. As the report also notes
Critics claim companies can reduce corporation tax rates by using transfer pricing, which sets the price at which one unit of a group sells goods or services to another unit of the same group in a different tax jurisdiction. Last year, it emerged that Google used a cross-border network of subsidiary companies to ensure it hardly paid any corporation tax on its £1.6bn advertising revenues in Britain. Such practices are legal, and Google said it made a substantial contribution in the UK via payroll and other taxes.
The Google expose was based on my work. As is the solution the Guardian clearly endorses:
Richard Murphy of lobby group the Tax Justice Network has long been campaigning for multinationals to be obliged to undertake country-by-country reporting to reduce the opportunities for transfer pricing.
He said the practice costs the developing world at least £100bn in lost revenues – three times the cost of the millennium development goals.
Murphy added: “The UK has promised to take a lead helping developing countries obtain the benefits of transparency and accountability. Country-by-country reporting can deliver more in that respect than anything else and the UK seems to understand that.”
They do: HM Revenue & Customs recently said that country-by-country reporting would unambiguously help increase UK tax revenue.
Link by Link – A Vision of Iceland as a Haven for Journalists – NYTimes.com.
As the New York Times reports:
A banking scandal nearly bankrupted this tiny island nation (population: barely 300,000) little more than a year ago, but Iceland is considering a new vision: to become a haven for journalists and publishers by offering some of the most aggressive protections for free speech and investigative journalism in the world.
The proposal, the Icelandic Modern Media Initiative, combines in a single piece of legislation provisions from around the world: whistle-blower laws and rules about Internet providers from the United States; source protection laws from Belgium; freedom of information laws from Estonia and Scotland, among others; and New York State’s law to counteract “libel tourism,” the practice of suing in courts, like Britain’s, where journalists have the hardest time prevailing.
“We would become the inverse of a tax haven,” said Birgitta Jonsdottir, a member of Parliament and a sponsor of the initiative. “They are trying to make everything opaque. We are trying to make it transparent.”
I think that deserves an unambiguous welcome. I can see file servers moving to Iceland from all over the world. And, no doubt, they hope people too.
BBC News – UK budget cuts ‘hurting Isle of Man’.
The BBC reports:
The Isle of Man government feels bruised, as if it has been kicked around unthinkingly by Whitehall.
“The Isle of Man is part of the British economy,” the Chief Minister Tony Brown tells me defiantly.
“We might not be part of the United Kingdom, but a considerable amount of the money we earn and spend is spent via the UK.
“We are a benefit to the UK, not a drain.”
This is absoluttely absurd. Tax abuses sponsored by the Isle of Man were costing the UK at least £1.5 billion a year until the VAT subsidy was withdrawn. That means they are still having impact way beyond the total government income in the Isle of Man.
If the Isle of Man wants to stop hurting stop being a tax haven. The option is there’s to take. But when you set out to undermine the government of another state – and that is what the Isle of Man conciously set out to do – don’t expect any sympathy in return.
Farmland: A growing investment | Money Matters | FT.com.
This article highlights what is so wrong about the UK.
Tax driven incentives for ‘investment’ are being used to divert scarce government revenue into tax avoidance creating artificial bubbles in so called investment media – in this case agricultural land – which add nothing to the real value of the economy but which force out those who are best placed to employ these resources – in this case farmers.
There is a simple solution to this abuse – which is to limit total claims for allowances and reliefs over and above the basic personal allowance to a sum not exceeding £5,000 when gross income for tax purposes (i.e. before any such allowances are offset) exceeds £100,000.
The benefits are obvious: the tax system is simplified, tax ceases to drive resource misallocation, asset bubbles are avoided and more tax is collected. I call that a quadruple whammy.
Bring it on, as I think some say.
Two weeks ago I turned the comments facility on this site off. I’d had enough of the abuse: I’d had enough of the time wasting comments were causing. Most people whose opinion I trust still think this was the right thing to do.
Traffic data suggest they’re right. Page views were 12,627 the week I turned comments off. They were 10,558 last week but I did not blog for well over two days and it was half term. Unique visitors were 7,630 the first week, 7,210 last week. In both cases RSS feeds tend to add 1,000 or so reads a day. Average reads a month are a bit over 50,000 page views and 20,000 RSS reads at present. Comments seem to make little difference to this – certainly comments pages make up 10% or less of traffic, even when things were out of control.
So why turn things back on? I only do so reluctantly – but last week I got dragged into discussion on another blog. If I’m going to waste time on comments I’ve concluded I might as well do it here – certainly engaging on the site in question was a real waste of time. Debate with neoliberal ex-City traders on financial transaction taxes was always going to be fruitless, and was. When their moderation policy allows abuse I have no time left for them.
So, comments are allowed here again, but subject to the comments policy noted here. And please note, I will be ruthless in deleting comments I think do not comply. So please don’t waste your time submitting material I am bound to reject: hitting the delete button takes seconds – you’ll waste a lot more time constructing your comment that will be heading straight for the bin.
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