2010 December » Tax Research UK

Monbiot’s right – time to get rid of the astroturfers

Blogging, Ethics, Politics 11 Responses »

Dec 142010

First rate article from George Monbiot this morning in the Guardian with which I have whole hearted agreement. Here’s a chunk:

Reading comment threads on the Guardian’s sites and elsewhere on the web, two patterns jump out at me. The first is that discussions of issues in which there’s little money at stake tend to be a lot more civilised than debates about issues where companies stand to lose or gain billions: such as climate change, public health and corporate tax avoidance. These are often characterised by amazing levels of abuse and disruption.

Articles about the environment are hit harder by such tactics than any others. I love debate, and I often wade into the threads beneath my columns. But it’s a depressing experience, as instead of contesting the issues I raise, many of those who disagree bombard me with infantile abuse, or just keep repeating a fiction, however often you discredit it. This ensures that an intelligent discussion is almost impossible – which appears to be the point.

The second pattern is the strong association between this tactic and a certain set of views: pro-corporate, anti-tax, anti-regulation. Both traditional conservatives and traditional progressives tend to be more willing to discuss an issue than these rightwing libertarians, many of whom seek to shut down debate.

So what’s going on? I’m not suggesting that most of the people trying to derail these discussions are paid to do so, though I would be surprised if none were. I’m suggesting that some of the efforts to prevent intelligence from blooming seem to be organised, and that neither website hosts nor other commenters know how to respond.

Here’s his conclusion:

The internet is a remarkable gift, which has granted us one of the greatest democratic opportunities since universal suffrage. We’re in danger of losing this global commons as it comes under assault from an army of trolls and flacks, many of them covertly organised or trained. The question for all of us – the Guardian, other websites, and everyone who benefits from this resource – is what we intend to do about it. It’s time we fought back and reclaimed the internet for what it does best: exploring issues, testing ideas, opening the debate.

The answer is easy George and I use it: it’s called the delete button. Those seeking to close down debate – and I have absolutely no doubt many who seek to comment on this blog seek to do that – deserve nothing more sophisticated than straightforward deletion of their comments. They do not ad anything to discussion. And deleting them is called editorial freedom. It’s something we must preserve. It’s fundamental to free speech – something that it seems most libertarians are fundamentally opposed to. So let’s be bold, blatant and honest about the fact we’re deleting in the name of freedom – because that’s exactly what I do.

Libertarians posting here: you have been warned.

This can only be deliberate

ConDems 2 Responses »

Dec 142010

The ConDems announcement on council cuts can only be deliberate.

All the big losers are inner city, poor locations. The relative winners are all Tory shires.

The 37 top losing councils are all Labour. 32 of the best off are Tory.

And yes, I know that Labour did pay much, much more to political authorities like Liverpool than i did to Richmond (whether Surrey or Yorkshire). But, and this may be a shock to many in the Tory shires, there was good reason for that. The scale of social need in poor urban areas is vastly, vastly higher than in leafy suburbs.

Of course it could be argued that some of that is the fault of those who live in poor inner city environments. There are undoubtedly some (a greater proportion than average) who live chaotic lives in those places. There are those who are, without doubt, welfare dependent. I don’t deny it. It would be wrong of me to do so. And there are those who have not worked, and may never work. I accept that too. Let’s not duck truths.

But, truth requires honest responses. And that is not what is being supplied by this government, which is going out of its way to punish these people (I mean that: I am saying that the ConDems are seeking to deliberately make the lives of these people, who are already the poorest in most communities worse off – and I think they enjoy the prospect of doing so). This will be especially apparent when the medical needs of these people – for which funding is being slashed – are not met. Being married to a GP who has spent most of her working life in areas of urban deprivation – and yes we have one in West Norfolk – it’s called Kings Lynn – I am exposed frequently to the tales of what those needs are, and they make a mockery of those of the shires’ ‚Äòworried well’.

And honest response recognises some other truths. The first is that we do not have jobs for far too many young men. When we had a half a million men working on the railways, vast numbers working in manufacturing and more besides we employed these men – often in what were at least notionally relatively low skilled roles, and yet each of which developed its own skill set over time – which most were afforded to develop that skill set as there was a commitment to employing people in the long term whenever possible. In other words, roles were developed for young men that met their need for employment and the learning needs and abilities they had. We’ve abandoned that approach. We now teach girls and their skill needs and we have no commitment to employing the young men failed by the education system by offering them long term work. We won’t address chaotic lives until we do address these issues. The Green New Deal is one way to tackle this issue. It recommends the creation of a “carbon army” – jobs to green the UK. It’s not the only one, but a way.

Nor will we address poverty until we recognise the need for long term, good housing for those without the capital to buy their own. I stress, good housing. We have mean, niggardly house building policies in the UK. Most housing is too small. State housing has been ignored, undermined and underfunded in terms of new build and maintenance. That’s a scandal. Of course we have poverty and a lack of hope in that case. Again, the Green New Deal has some answers. Not all, but some.

And we need to be much more open minded about what education is. It is ludicrous to design the whole education system around university admission when at least 50% will not go. And yet Gove is downgrading vocational training. He will only isolate more people from the whole education process, whilst refusing to fund them to stay until 18 and yet demanding that they must do so.

The truth is all these things need spending. And spending now. But as I’ve argued time and again, and will continue to do so – that spending will pay. When I did the calculations in 2009 cutting a job paying £25,000 cost the UK £23,000 or more in lost revenue – and that’s before the knock on effect in the private sector was considered. Of course, as a result the reverse is also true. Create a job and it almost pays for itself directly. Add in the private sector knock on effect and it always will pay.

There is one way to get out of recession – and that is to tackle unemployment.

There is one way to tackle urban poverty – and that is to spend.

We can afford both.

It’s a choice to deprive people of work.

It’s a choice to deprive people of hope, homes and the help they need.

It’s a choice to favour the richest over the poorest in our communities.

They’re choices the ConDems are making.

And they’re all ones for which they must be held to account.

The Christmas #1?

ConDems 19 Responses »

Dec 132010

Buy it now

Why tax avoidance is a breach of contract

ConDems, Tax avoidance, Tax justice 19 Responses »

Dec 132010

I have the following post on the UK Uncut blog this morning. They used the title “If ever there was a campaign the Tories should support‚Ä¶”:

“Those who oppose the UK Uncut tax protests argue – as the new head of the CBI did in the Observer today – that a company has a duty to be “tax efficient”. In saying this Carr argued:

"What are the rights, duties and responsibilities of any company? To ensure shareholders are correctly rewarded and to act in the right way for the organisation. Part of that is to be tax efficient. That’s reasonable and appropriate."

He’s wrong. As the Tax Justice Network has argued:

Companies and rich people can locate wherever they are "tax efficient". Ordinary people lose out from the process. There is a term for this: its called the Bono Defence. Named after the Irish rock musician whose band shifted its tax base from now bankrupt Ireland to the Netherlands in the name of "tax efficiency", the Bono Defence provides stark warning that tax dodging doesn’t promote better economics; it promotes failed states.

That’s a big claim, but one that is justified. Those like Bono and the CBI, and others from business and the right wing who argue tax efficiency is simply tax avoidance and tax avoidance is legal and so acceptable have entirely missed (or deliberately ignored) some enormous ethical issues when making their claims. For a description of what tax avoidance (and some of the other language used here about tax) means I refer you to my blog but the big issues can easily be explained.

First, just because something is legal does not mean it is ethical. Think apartheid in South Africa or even slavery in 18th century England and move on from there.

Second, remember that when you avoid something you go round it. That’s what tax avoiders do. They go round the law. How on earth can anyone, anywhere claim that getting round the law is ethical?

But perhaps most important is the fact that a limited liability company gives its shareholders in whose interest Roger Carr says it must be run the most phenomenal economic privilege: they cannot be sued for the debts the company incurs if all goes wrong even though they get all the benefit if things go right. That’s an astonishing privilege. It is not a right. I stress, it is a privilege – and one that is granted by parliament on behalf of the people of the UK.

The privilege carries with it at least two implicit responsibilities. The first is to account for how the privilege is used – which means putting full and proper accounts on public record so we can know exactly what our companies are up to. The second obligation is to pay for the privilege – and that means complying fully and willingly with the tax (and other) laws passed by the UK parliament that creates them using exactly the same authority that they use to grant the privilege of limited legal liability. Of course these two obligations are also related – the accounts must properly explain how much tax is paid.

In combination these observations puts paid completely and utterly to Roger Carr’s argument that the company has a duty to its shareholders to be “tax efficient”. That’s not true. It has a duty to society to be tax compliant in exchange for the benefit of limited liability granted to its shareholders.

That then requires that companies be tax compliant. Tax compliance means 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.

Tax compliance is a million miles form tax avoidance. Tax avoidance is about reducing a tax bill come what may without breaking the law, and not caring who else has to pick up the bill. Tax compliance is about trying to pay the right amount of tax, but no more. The last bit is important: no one has to voluntarily pay tax. But no one has to use a tax haven or a loophole either when the result is that the tax not paid by the company and its shareholders as a result will be shifted onto ordinary working people instead (and for the pedants who say this assumes tax is a zero sum game, my answer is it certainly looks like it is from all the evidence over recent years of tax burdens shifting from capital to labour).

So, in that case what is UK Uncut doing? In summary it seems to me it is doing three things. First it is trying to uphold parliament and the ethics of democracy – including voluntary compliance with the rule of law. Second it’s asking that people, and especially large companies, comply with the law – and not avoid it. And thirdly it’s saying that there’s a contract between the people of the UK and the people who own companies which is implicit in the granting of limited liability and that some who use companies are acting in breach of that contract. That is unacceptable and all UK Uncut are saying is that it’s time corporate UK honoured the obligations it has to fulfil in exchange for the privilege it has been granted.

Seen in this way it’s extraordinary that anyone can object to such a campaign. If ever there was a campaign that Tories should be turning out in force to support it’s this one, largely run by young people, that demands that people comply with the law and respect parliamentary democracy.

So the real question is, if they aren’t doing that, then why not? Could it be that they’re on the side of those who are in breach of their contract with society? “

Wealth helping wealth

ConDems, Tax avoidance Comments Off

Dec 132010

In amongst the cuts there’s time for the Tories to ensure they help their own.

As the FT reports:

Tens of thousands of investors are expected to use their pension pot to avoid inheritance tax each year after the government announced a shake-up of the regime this week.

There’s nothing like a good inheritance tax wheeze to keep the faithful happy, is there George? And this one is just that – a tax wheeze for the faithful.

The death of democracy?

ConDems, Ethics, Politics 28 Responses »

Dec 132010

Today’s announcements about turning the “Big Society” into law are much more significant than they seem.

Ignore Nick Clegg’s pathetic statements that The Big Society is Liberalism. And ignore all the waffle about empowerment. This is not such thing, at all.

The core issue of significance today is the draft legislation that will enable communities to call a binding referendum if a local authority wants to increase council tax by more than the cap set by the communities secretary. As the FT notes:

Eric Pickles, the communities secretary, will outline initiatives that will, he said, attempt to “end the era of big government”.

No, this is about bringing the era of democratic government to an end. The neoliberal right wing frequently argue that democracy is dangerous – because it allows a majority to set tax rates and they claim this is prejudicial to the minority who pay most tax. And here is Pickles bringing this idea into the UK – saying that if a small minority do not like a tax increase proposed by a democratically elected local authority they can oppose it. The imp0lication is all too obvious. Democracy is not to be trusted, this says. And the right to veto the democratic wish of the majority has to be granted to those who might pay more than average tax as a result – with, no doubt, a minority being granted the right to veto.

This is fundamentally undemocratic.

But it’s also about ensuring that reallocation of wealth through tax does not take place, and that the poorest remain poor. remember, the biggest part of council spending is on social services.

I think this the thin end of the wedge. next we’ll have a right granted that a tiny minority can call a referendum to veto any tax rise, and we’re steadily on our way to a flat tax system whilst in the meantime all those former public services are given away, for nothing no doubt as they’re suddenly worthless as we can no longer afford them, to money grabbing so called “entrepreneurs” who will exploit the local monopolies they will possess for private gain at the expense of the rest of us.

This is fundamentally dangerous for the stability of government in the UK, for the future of democracy, and civil order. Yes, I’m worried. I think this is a dangerous path that could lead to serious civil unrest as a majority are oppressed by a minority– and I don’t like that prospect, at all.

Labour has to oppose this with all the might it can muster.

If they don’t then they too are in trouble. And that would be even more worrying.

How to make a protest against tax avoiding companies

Tax avoidance, Tax justice 2 Responses »

Dec 132010

The innovative blog on making a one person protest against tax avoiding companies has been updated. Read it here.

And for those in doubt about whether it’s right to target individual companies, read this.

Tax justice back on the Westminster agenda – which is where it belongs

Tax justice Comments Off

Dec 132010

From the Guardian editorial page this morning, unapologetically in full:

Quibble, if you must, with the tactics and the arguments of the protesters who besieged branches of Vodafone this weekend, and shut down the giant Topshop on London’s Oxford Street last Saturday. But give the UK Uncut demonstrators credit for this: instead of taking cheap shots at David Cameron, they are making a tricky, worthwhile argument about tax.

The reason protesters have gone after Topshop boss Sir Philip Green is because he advises the government on how better to spend its tax revenues, while arranging his affairs to avoid paying as much tax as he might. Five years ago, he banked a £1.2bn dividend from the Arcadia group that owns Topshop and others – and the money went to his wife, who, handily enough, lives in Monaco. Nothing illegal in that, but equally a lot of ordinary taxpayers may ask why someone who goes in for such schemes should advise ministers on issues of how tax money is spent. Similarly, Vodafone has faced accusations from activists who claim it has strong-armed Her Majesty’s Revenue and Customs (HMRC) into accepting a tax payment some £6bn less than it is rightfully owed.

Consider what these protests tell you about the argument over tax justice. Vodafone disputes protesters’ claims, and yet its executives privately acknowledge that they do not expect the demonstrations to go away any time soon. A technical argument over how much a multinational should pay to the British taxman may now be affecting Vodafone’s business (you try buying a BlackBerry during a store sit-in) and has worked its way into the political debate.

Certainly, all this poses a direct challenge to the coalition. George Osborne has long calculated that the public would prefer eye-watering spending cuts over big rises in tax; which is why, in the coming fiscal consolidation, public spending will be reduced by £4 for every £1 put on tax. That political calculation may have appeared convincing six months ago; it looks less so now. Last week the government was jolted into bringing forward its plans for a general anti-avoidance principle, which could mean companies running their tax avoidance plans by HMRC before charging ahead.

Whether right or left, politicians typically assume that businesses always hanker after lower taxes. Yet small firms often want the opposite things from multinationals, and the interests of the finance industry do not reflect all of British business. So much was proved yesterday when the new CBI boss, Roger Carr, gave his support to the 50p super income tax introduced by Labour. The full effects of the past few weeks’ protests are not yet apparent; but it looks likely that they have at least put tax justice back on the Westminster agenda. Which is where it belongs.

I’m not arguing with that.

Now I’m their “arch nemesis”

Cayman Comments Off

Dec 132010

Last week Anthony Travers, head of Cayman Finance described me as the head of the “tax Taliban”. Given he seems to think this apparently includes “onshore Treasury, and supranational and domestic regulatory bodies, British politicians such as Emma Reynolds and former Prime Minister Gordon Brown and even US President Barack Obama”. Some list. Morning all!

Now I note that according to Cayman News Service I am Travers’ “arch nemesis”.

All, however, is OK for Travers as apparently:

these movements were ‚Ä¶diminishing Travers claimed as he told his audience their claims “are a heresy and are unlikely to withstand the tax transparency” that he said Cayman demonstrated.

Heretics, eh? Am I to be burnt at the stake then?

Or is it time for Travers to get a grip on reality? Not least the fact that I have nothing against him personally, at all. I can oppose what he stands for and still recognise his right to say it. Apparently that sentiment is not mutual. That’s not to the credit of his argument.