The Daily Mail, in an appalling diatribe this morning, argues that because in real terms public spending in 2014 will be at the same level as 2008 there is nothing for anyone to protest about.

It’s quite hard to assume anyone is stupid enough to write this so I presume the misinformation is deliberate, or originates in the Taxpayers’ Alliance.

The headline numbers are right. Albeit they assume the government can deliver its plans, which is unlikely.

But the fallacy is in assuming that the composition of the numbers in 2014 is the same as in 2008. Just look at the composition of spending in 2014 compared with 2008. Interest charges will be much higher. That’s not government’s fault: that’s bankers’ fault – and they’re the winners from it.

And look at unemployment. In 2008 there were 1.6 million unemployed. The number now is 2.5 million and is expected to rise over the coming years. So in that static spending we’re paying for nearly a million or so people to be unemployed and are providing for their dependents. But spending is remaining static.

That’s why there are cuts.

And that’s why the Mail is lying through its back teeth when claiming constant spending means there is no reason to protest.

 

The Mail has a good round of TUC bashing in its pages this morning.

But as the TUC note today:

The economic outlook has got worse over the last six months.

It’s the Office for Budget Responsibility that says so. This is their data:

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This shows they now expect:

- GDP to be lower;

- The balanace of payments to be worse;

- Inflation to be higher;Employment to be lower;

- Unemployment (ILO measure and claimant count) to be higher;

- Average earnings to be lower; and

- Household disposable income to be lower.

Every single one is a good reason for coming to today’s March for the Alternative.

 

I cam across the following amazing data on a log called Sturdyblog, to whom I give full credit and hoe they’ll forgive my copying such enormously important information:

Ahead of Osborne’s emergency budget, the forecast of the OBR for household debt (i.e. the money an average UK household owes, incl. secured loans like mortgages) had been:

This showed a predicted decrease of household debt as a percentage of household income, from 150% in 2010 to 143% in 2014. This had to be revised for Osborne’s emergency budget:

The decrease is now less sharp between 2010 (151%) and 2014 (146%) and actually flat-lines in the last three years of the forecast. Ahead of Osborne’s recent budget, however, as the cuts bite and growth stutters, the OBR had to issue a correction, dramatically revising their forecasts to:

Not only are they no longer looking at a decrease in household debt. They are looking at a STONKING 14% increase over the next five years. In money terms, almost £500 billion is being added to MINE and YOUR personal debt. And this doesn’t even take into account the inevitable, approaching interest rate hike.

So the government is going to cut its debt.

And as I noted they’re going to do that by increasing taxes at way over the rate of inflation, whilst cutting services.

And how is the equation squared? Why, they’re now predicting we’ll go into debt to pay for it.

I guess that’s one way to prepare RBS and Lloyds for privatisation.

But make no mistake – what this really means is that the groundwork for the next crash is being laid out in the government’s own plans as borrowing becomes the only way people can feed and house themselves and their families. Irresponsible lending will follow, and we all know where that leads.

I am sickened at their sheer gall. So should everyone else. And full marks to Sturdyblog for spotting this.

 

From Hansard, yesterday:

Kate Green (Stretford and Urmston, Labour):

Can the Leader of the House ensure that we have a statement next week on the Government’s child poverty strategy? Under the Child Poverty Act 2010 the Government are required to publish such a strategy by tomorrow, yet in a written answer from the Minister with responsibility for disabled people earlier this week, I was informed that she has not yet even seen fit to appoint the commission that is intended to advise on such a strategy.

The reply?

George Young (Leader of the House of Commons, House of Commons; North West Hampshire, Conservative

The hon. Lady has made a valid point, which has been addressed in a written ministerial statement. I know that my right hon. Friend the Secretary of State for Work and Pensions will want to regularise the position as soon as he can, and I will ensure that he informs the House in the near future of how he proposes to do that.

Or in other words – the government does not care about child poverty.

Their actions tell of their sentiment.

And it’s a shocking indictment of their priorities: cutting corporation tax for companies using tax havens matters. Children in poverty don’t.

 

I have the following piece in the printed version of the Belfast Telegraph this morning:

The Conservatives have now made clear that they think the Stormont government should reduce the corporation tax rate in Northern Ireland.

They are wrong to do so. I set out many reasons for saying so in a publication entitled ‚ÄòPot of Gold or Fool’s Gold? ’ published by the ICTU last autumn. I’ll summarise just some of them here.

First, unlike the government I do not think this power can be devolved to Northern Ireland under EU law. That Whitehall is even proposing this is sufficient in itself to suggest that any such action will fall foul of EU law. The decision has to originate in Stormont, and isn’t. The risk of getting this wrong is too big to take, and will discourage business from relocating because of the resulting uncertainty.

Second, the only known outcome of the change will be Northern Ireland losing part of the block grant. Northern Ireland cannot afford that risk when the upside is a massive gamble of £160 a year for every person in Northern Ireland on the creation of a tax haven.

Third, precisely because this is a tax haven activity EU law would restrict who could take advantage of it. Finance companies could not. Nor could companies providing what are called ‚Äòintra-group services’ within groups of companies. That massively reduces the attraction to the type of business that relocates to the Republic.

Fourth, as the government’s own paper recognises, nothing Northern Ireland could do could replicate the lax tax regime of the Republic which refuses to tax large tranches of profit – so Northern Ireland can never compete with Dublin’s current offering.

Fifth, Ireland is under massive pressure to withdraw the 12.5% rate now, and may do so under protest to cut the cost of its bail out.

And finally the sheer admin complexity of two tax rates and a tax border with the rest of the UK will eliminate all the cash advantages for companies.

This is an idea that needs to be returned to the economics classroom now, where it belongs as an object of idle curiosity of no benefit to a single person in Northern Ireland.

There’s one piece of good news: The DUP hold the Treasury portfolio in Northern Ireland their minister, Sammy Wilson, is not convinced. Maybe he’ll stand up to the madness of George Osborne and the Taxpayer’s Alliance – because that’s where this folly began.

And that’s resoundingly good reason why it should end – because we all know they, like Osborne, are members of the Ministry of Truth – where everything is the opposite of what is claimed.

 

It Cuts Both Ways…The Alternatives from Oonagh Cousins on Vimeo.

 

Reuters Africa report:

JOHANNESBURG (Reuters) – Mining companies say they accept the thrust of new U.S. Securities and Exchange (SEC) regulations that will require them to disclose payments to foreign governments.

Executives speaking at the Reuters Mining and Steel Summit said enhanced transparency could help clean up the image of an industry with a shabby reputation.

“The greater the transparency the better it is for our company, the better it is for our industry, and so we’re very supportive of that,” Aaron Regent, the chief executive of Barrick Gold, told the summit.

The logic is getting through at last.

Country-by-country reporting benefits everyone in business, and civil society too.

March for the alternative

 TUC  Comments Off
Mar 252011
 

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See you there.

11am on The Embankment.

 

The announcement that £1 billion is to be raised from tackling tax avoidance in the Budget has been greeted with near universal cynicism.

I have been critical of the proposed measures – which amount to nothing more then reiteration of past H M Revenue & Customs behaviour, with one minor exception and a couple of ongoing reviews. Others have shared the view.

The Economist is of similar opinion, even if they have forgotten the difference between evasion and avoidance:

[Osborne's] other big measure was to raise £1 billion by clamping down on tax evasion.

Now we can probably all agree on disliking the principle of tax evasion. …

More generally, eliminating tax evasion is something all finance ministers tend to promise but few achieve. It would be nice to see an analysis of previous efforts on this score (the last Labour government announced a few) and see how much tax was actually raised. It is a bit like eliminating waste in public spending; we all know it’s there but getting rid of it is another matter. Evasion and waste are the Holy Grails of finance ministers.

Don’t get me wrong. I’m all for eliminating corporate welfare and preventing the wealthy from hiding their money offshore. I’m just not convinced it will happen without internationally co-ordinated efforts. And I’m not sure that finance ministers should ever be confident enough to put a number on the proceeds. The tax giveways announced today may be certain; that £1 billion is not.

I understand that scepticism: it is always hard to measure what is wino from any such initiative. There is no yardstick available, anywhere, that let’s the alternative scenario where action was not taken be measured. So of course there can be doubt.

But there is further good reason for doubt, and that is that so much of what is proposed is, candidly, in the form of tinkering with legislation. And as the Economist notes:

The trouble is that a lot of these loopholes result from previous attempts by finance ministers to fiddle with the tax code; the chances are that new fiddles will create new loopholes.

I have a lot of sympathy for that. It’s why I support a general anti-avoidance principle. It’s why I want one, soon. And hope we’ll get one, soon. Even though I remain doubtful that George will deliver.

I think there is good reason for thinking that whilst plugging loopholes is important it is not enough. And that if that’s true then we need something much more robust to tackle the problems of evasion in particular, and avoidance to a lesser degree (because evasion is bigger than avoidance, lest we ever forget, and whatever the government chooses to do when spinning its statistics on this issue).

Evasion is invariably based on deliberate non-disclosure of data to H M Revenue & Customs. I estimate it’s £70 billion a year. I know full well that HMRC says it’s less. But then they base their estimate on the tax returns they receive. Which of course means they underestimate the issue. Tax evaders don’t submit tax returns. This glaringly obvious point explains much of the difference between their estimate and mine.

So to tackle tax evasion we don’t need new legislation. We need existing legislation requiring that information be submitted to be enforced. And we need new sources of data on who might be hiding their tax affairs from view. And we need resources to be made available to ensure that evaded tax can be collected.

All of this is possible. We could require that banks tell HMRC when they open bank accounts for limited companies and pass legislation allowing HMRC to demand that bank account information when the hundreds of thousands of companies that do not submit corporation tax returns and accounts each year fail to meet their legal obligations to do so. We could provide more staff at Companies House to chase the 500,000 companies that disappear from view each year. We could ensure that more than 45% of companies submit a corporation tax return each year. How much do you think that might raise? I suggest the less if £16 billion. Suppose we got a quarter back?

We could demand automatic information exchange from tax havens. I’ve designed a simple form of this. It’s based solely on data tax havens / secrecy jurisdictions must hold. It requires no data on income to be exchanged. It just requires that every offshore account held by a UK resident in a tax haven would have to be disclosed to the UK tax authorities under the teems of new international agreements – agreements that HMRC opposes for reasons that are extremely hard to understand.

We could do more: we could reconcile Yellow Pages with tax returns. How many businesses do not pay?

We could send tax inspectors to car boot sales to police illegal trading.

We could monitor e-bay for undisclosed trading.

We could demand that the purchase and sale of all shares for a value of more than £10,000 be disclosed to H M Revenue & Customs, automatically.

Every business could be required to submit the names and addresses of its top ten customers and suppliers to HMRC. If they can’t say they’re at risk, or a cash business. That also means that they’re at risk.

This is all easy stuff to do. Well within the bounds of possibility. It needs resources, but the yield would be enormous. And the argil cost of employing people to do the work when we have 2.5 million unemployed is tiny – as benefits are saved and tax paid out of wages paid. The contribution to deficit cutting would be enormous.

So don’t tell me cutting the deficit without cutting services is not possible.

And don’t tell me we can’t tackle tax evasion.

We can do both.

But it needs political will.

The will to take money from cheats and give it to those who need it.

That’s all it takes.

But Osborne has not got that will.

And the right question to ask is why he prefers cheats to the poor, disabled, young, unemployed, pensioners, sick and students (amongst others). Because by his actions we know he does.

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