2011 February » Tax Research UK

Neets have a right to be heard – and we must support them

ConDems, Economics, Ethics, Tax justice 6 Responses »

Feb 272011

I’m not sure I like the term Neets – which stands for “not in employment, education and training”. But it’s highly relevant. There are coming on for a million 16 to 24 year olds in this category now.

The Neets are important – those who are unemployed at this age are, evidence shows, likely to be harmed for life. Their earning capacity will always be impaired. Their chance of successive periods of unemployment is high. And with that many out of work its hard to imagine people do not knwo someone in this group in society – I certainly do.

We have seen mass opposition to the sale of forests. But now we need to see mass opposition to this waste of human talent. And some are protesting, and rightly so. This is in part what UK Uncut is about. As Heather Stewart said in the Observer today:

A new generation is starting to join the dots between, for example, bumper bonuses at the banks, large-scale tax avoidance by some of Britain’s biggest companies, and the age of austerity being so painfully imposed on the rest of us. It is, as they quite rightly say, not fair – and Osborne’s doctrine that government must “get out of the way” and let the private sector flourish will cut no ice with those queueing outside the jobcentre. They may not be as organised as the “save our forests” campaign that forced the government into an embarrassing U-turn over its plans to flog off our woodland; but they have every right to be heard.

They’re right to notice this link.

It’s noted again in the Observer’s coverage of BP’s claim for a massive tax refund – a claim made in support of its right to the free movement of capital it says – a claim to be pursued ahead of course of the right of young people to work in this country. As is again noted:

The tax bills of major companies have been under scrutiny this month since it emerged Barclays paid just £113m in corporation tax in 2009 despite reporting £11.6bn of profits. Barclays is benefiting from rules allow all companies to use losses to offset against future profits. Chancellor George Osborne has ruled out introducing rules that could place a limit on how long such losses can be carried forward.

The bailed-out banks Royal Bank of Scotland and Lloyds Banking Group are not paying any corporation tax at all and analysts believe it could be many years before they do so.

HSBC, which is expected to report £12bn of profits on 28 February, can also be expected to face questions about how much corporation tax it pays in the UK.

I’m delighted to have aid some part in raising these questions. This debate – on tax justice as justice for people as opposed to capital in this country – is key to the debate on the future we want.

The question it asks is what comes first – people or capital?

And it asks the question – why do some (corporations and their owners, all of them) seem able to avoid their responsibility – not just here but right around the world (see this article about Australia if in doubt)?

This is why tackling the rolling back of the corporate tax regime – whatever its apologists say – is so clearly a choice by the ConDem government – and one that is so very obviously worng.

Come April this government’s contempt for Neets will become very obviously just a part of their contempt for all middle and low income people in this country. And this is a choice – a point I made on Newsnight last week in the context of the choice to reduce the burden of corporation tax whilst at the same time imposing increasing burdens on the young, poorest and middle income people of this country.

It’s right to protest against this choice.

It’s a choice that Cameron, through gerrymandered electoral reform wants to make permanent by seeking to deny forever the chance (he hopes) of electing anything but a Conservative government.

It’s a chance we need to deny him. Fianna Fail sought to destroy Ireland for the benefit of a few. Cameron is seeking to destroy whole swathes of hope in this country for much the same rason. And we need to treat him and his governemtn and its partners with the same contempt that the Irish have now shown for Fianna Fail.

And yes, peaceful protest – peaceful mass protest if need be – is an essential part of that. Because people come before capital, and the rights of capital’s owners to preserve their wealth at cost to all else.

Why do we allow the free movement of capital?

Economics, Ethics 9 Responses »

Feb 272011

BP is suing the UK government in an effort to reclaim £300 million of tax it says it does not owe.

I do not know the rights or wrongs of this case – I am not a stamp duty expert and have never claimed to be. But I am intrigued by a claim made by BP, as reported by the Telegraph:

The claimants also argue that the demand imposed “restrictions on the free movement of capital” that was “not justifed by public interest”.

Why do we allow the free movement of capital?

We do not allow the free movement of people.

So why do we choose to let capital roam as it wishes? Why is it acceptable to let capital minimise its tax? Why can capital use artifice, from the limited liability entity to the tax haven, and yet we impose the cost of supporting its errors on people?

What is the reason for condemning 5 billion of the 6 billion or so people in the world to poverty to make sure capital can make money?

Why have we made this choice?

And why do we let the European Union base much of its law on this idea?

And as a result let BP seek to claim tax from each and every one of us on the basis that we can pay, but they do not need to do so?

What is this about?

Or to put it another way – why are we still choosing money over people?

UK freezes Gadaffi’s assets – but why now?

Corruption 16 Responses »

Feb 272011

The UK’s frozen Gadaffi’s assets tonight.

But first, apparently we know he has them.

Second, why now?

How come no one has suspected they might have been money laundered before?

Yes, I’ve asked this already of Mubarak.

But can we have answers about how UK bankers and presumably lawyers and maybe accountants have handled his funds without suspicion of koney laundering until now?

Why?

And shouldn’t we now freeze the assets of the leaders of a great many more states?

And if not, why not?

Faisal Islam takes RBS to task on tax

Banking 4 Responses »

Feb 252011

Worth watching.

Hester is clearly uncomfortable and his excuses don’t even reach the status of lame.

I should disclose that I met Faisal this week.

Enough!

Blogging, ConDems 4 Responses »

Feb 242011

Sometimes every one needs a day off.

It’s half term.

I’m taking tomorrow and maybe even the weekend off (but I’ll decide on that at the time)

So if I don’t moderate comments please don’t rant about it.

I’ve got a duty to be a Dad too, sometimes. And we’re going cycling in the forest – a Forestry Commission forest – that might still belong to the nation, I hope, when they come to do the same with their children.

So this is also a quiet note of thanks to all who protested at their proposed sale and made this government see the foolishness of their ways.

The Tea Party takes on middle America

Economics, USA 4 Responses »

Feb 242011

From the First Post Daily:

In Tahrir Square in Cairo, there was a young Egyptian man with a sign stating: ‘Egypt Supports Wisconsin Workers: One World, One Pain’. In Madison, Egypt’s revolution has been frequently evoked. Two dollars a day in the colony, or $45,000 a year in the heart of the Empire: at both ends people are being pushed over the edge.

The war in Madison signals the onset of a new Republican onslaught on labour – with the implicit aim of destroying organised labour in America. The stakes are very high.

The Republican right wants to destroy middle, professional America.

It’s a short step to what Cameron’s doing here.

This is the reality of the right – seeking to destroy livelihoods to support the wealth of a few.

Wisconsin workers have to win. Or next they’ll come for you.

The International Accounting Standards Board – needing to fulfil its mandate, not reform it

Accounting, Country-by-country, IASB Comments Off

Feb 242011

The International Accounting Standards Board is undertaking a consultation – closing today – on its strategy.

The first questions it asks is this:

1. The current Constitution states, “These standards [IFRSs] should require high quality, transparent and comparable information in financial statements and other financial reporting to help investors, other participants in the world’s capital markets and other users of financial information make economic decisions. ” Should this objective be subject to revision?

I have submitted a response, saying there is, as such, no problem with the definition of the objectives for International Financial Reporting Standards noted above. There is, in practice, an enormous gulf between the stated objective and the delivery of International Financial Reporting Standards. The reality is that the International Accounting Standards Board has decided that information supplied to investors and other providers of capital In the world’s capital markets is sufficient information to meet the needs of all other users of financial information in the course of making the economic decisions. It is almost impossible to see how this decision can be reconciled with the stated objectives of the Constitution, and it is equally difficult to see how this viewpoint can be sustained in the face of rational argument.

As has been argued by Tax Research LLP, there are a wide range of users of financial statements, quite consistently identified over a long period of time to include:

‚Ä¢ The equity investor group (shareholders) ;

‚Ä¢ The loan creditor group (banks and bondholders) ;

‚Ä¢ The analyst-adviser group who advise the above groups;

‚Ä¢ Business partners; ‚Ä¢ Consumers;

‚Ä¢ Employees;

‚Ä¢ The business contact group;

‚Ä¢ The surrounding community;

‚Ä¢ Civil society organizations; and

‚Ä¢ Governments and their institutions.

The first three such groups may (and we stress, may) have their needs met by existing data included in financial statements. This may be because the data they require is, in essence, required to undertake a remarkably limited function. Those users need, in the opinion put forward by the International Accounting Standards Board, to decide whether to continue their engagement with the entity solely in their capacity as suppliers of capital. As participants in the world’s financial markets, which are (usually) liquid and functional they have opportunity, often at little more than a moment’s notice to change their view on this issue, and engage or disengage as they wish. This then is a simple need of a group with remarkably little, or almost no effective or on-going relationship with the entity to which they provide capital, with which they have little or no effective actual relationship at all. It is this simple need that the IASB has chosen to address.

The needs of the other user groups for financial statements are complex. Those groups tend to have long-term relationships that are undertaken directly with the entity, or components of it, on a recurring basis. It may well be very hard for them to change these relationships in the short term. The relationships may be of dependency; they may be ones of oversight; they may be beneficial and they can involve the imposition of harm through the externalities of trade. But in almost no situation because of the complexity of the relationship is the information need of those users the same as that of the transient supplier of capital to an entity in the world’s financial markets.

The supplier of capital may well view the entity with which it engages as a whole. The relationship can be viewed globally: financial statements prepared on a consolidated basis suit the need of these users.

The other user groups view the entity locally: their concern is with the part of the entity with which they engage, whether as supplier or customer, nationally or even more locally, as employer, as neighbour, as taxpayer, as polluter, as supporter of civil society, and much more besides. The key issue is that the needs we identify these user groups as having in that appendix are not just not being met, they are deliberately not being met as a consequence of the decision of the International Accounting Standards Board to ignore them even though the Trustees accept their duty to do so in their constitution.

It is this failure to provide relevant and reliable information to the great majority of potential users of financial statements (they are of course only potential users since existing financial statements do not meet their needs) that poses the greatest challenge to and greatest threat to the International Accounting Standards Board.

There is no need for the International Accounting Standards Board to change its purpose. It is essential that it embrace the duty that it has accepted and now ensure that the information needed by ‚Äòother users of financial statements’ is made available to them to enable them to make the economic decisions which are frequently of much greater import to them, their families, their businesses, their localities and their nations than are those undertaken by the suppliers of capital. We stress: the economic decision in question are ones that they need to make based on data extracted from the general ledgers of the reporting entities subject to International Financial Reporting Standard and only capable of delivery to them as part of comprehensive, audited financial statements. Failure to embrace this obligation now will undermine the entire credibility of the International Accounting Standards Board. Embracing it will ensure its future. We think the issue as important as that.

But I wonder – will they simply abandon the duty to other users instead? That’s been their tone to date.

RBS loss almost the same as its bonuses

Banking, ConDems 9 Responses »

Feb 242011

The Guardian has reported in the last few minutes:

Bailed out Royal Bank of Scotland reported losses of £1.1bn for 2010 – but still plans to pay out bonuses of £950m to its bankers.

The contempt bankers have for society is evident in the comments made by Stephen Hester made. The Guardian reports:

He admitted that he was not able to hire staff as easily as he hoped because the bank has often become a “political football”.

“Our ability to attract, retain and motivate the best people is still not what we want it to be. Our business challenges and the external environment lead to management compromises that add risk to the achievement of our business goals. We are working hard to move forward and balance staff motivation with external acceptance that past mistakes have been addressed,” he said.

Motivation is not created by £950 million in bonuses?

The man is a fool. Let’s not beat around the bush.

And this is, I admit, the consequence of Labour’s failure. They did not nationalise this bank. They should have done. They instead put it in a company called UK Financial Investments – in turn owned by the Treasury, but they passed the entire management to bankers.

This was an act of outright folly at the time and it is increasingly apparent that it was now. The result is that these people hold us all to ransom.

When will we realise that we have to break banking to make progress? Break it into bits, break its power, break its abusive pay structures, break its ability to avoid tax, break its control of tax havens and break its right to create money out of nothing. Yes, I mean, we need to break banking.

And instead David Cameron talks about selling RBS to Qatar. I wonder if the seat on the Board will go to him or George when they lose office?

Now the Tories want a corporation tax cut for Wales

Conservatives, Corporation Tax, Economics 3 Responses »

Feb 242011

We have recently seen the madness of a Tory cabinet Minister urging Northern Ireland to become a tax haven – even though that can only be done at enormous cost to the people of Northern Ireland, as I have pointed out.

And now we have the same completely bizarre logic being promoted by the Tories in Wales. Their ‘Welsh Economic Commission’ is making its main recommendation a reduction of corporation tax for Welsh businesses which they say:

we believe is the radical step required following years of economic decline.

Oh dear. Apparently:

In order to spur investment by Welsh-based companies and attract high value added foreign direct investment, we believe that the UK government should be lobbied for a reduced corporation tax rate for Wales as this is the only major economic structural change that can lift the Welsh economy from the bottom of the UK prosperity league table.

I admit this shows a touching faith in the power of tax – but it’s in direct conflict with, for example, their belief that all small business should be financed by taxpayer funded grants. Unless, of course their belief is (as most Tories now seem to think) the flow of benefits is to the rich at cost to the poorest.

As they note:

Unfortunately, no business or government body in Wales has undertaken a r study to examine the impact of lower corporation tax on the Welsh economy, although a recent paper from Cardiff Business School suggested that a significant reduction in corporation tax in Wales could create at least 16,000 additional jobs.

Not cutting government spending would have the same jobs effect of course – and the Welsh Assembly’s refusal to take part in NHS reform is certainly saving that many jobs, I’m sure.

But let’s just consider the reality of this proposal for a minute: to meet EU requirements there would be a need for a separate tax authority for Wales. And a parliament with full taxing powers in Wales. And constitutional approval for the the change to that power. And the EU would need to be convinced this was not done just to change tax rates. And then there would have to be transfer pricing regulations in operation for all goods going into and out of Wales where there was common ownership on both sides of the border – so most lorries crossing the border would now require documentary proof of transfer prices.

And there would also be anti-avoidance measures to prevent relocation of business to Wales from England, putting obstacles in the path of relocation.

The chaos would be never ending.

I note the author of this proposal was a professor of entrepreneurship at the age of 29. It’s s shame he never went out and did a bit of the real thing and some tax too, unlike some of us. If he had he’d have realised just how mad his proposal is.

But he’s a Tory – and experience of the real world of work is quite unacceptable if you want to get on there.