2011 August » Tax Research UK

It’s time for Northern Ireland to get real on corporation tax

Corporation Tax, Europe, Ireland, Uncategorized Comments Off

Aug 192011

The Belfast Telegraph featured an article yesterday where a KPMG partner in Belfast argued Ireland will never give up its low tax rate whatever Merkel and Sarkozy say and that Northern Ireland’s tax rate must be cut as soon as possible.

KPMG are heavily invested in the plan to make Northern Ireland a tax haven so I am not surprised by the comments. They are, of course, amongst the very few who would gain from this plan which would be massively onerous for the ordinary people of Northern Ireland.

In response the Belfast Telegraph reported:

But anti-poverty campaigner and blogger Richard Murphy said that harmonisation was “inevitable” and called for Ireland to “stop looting other European economies”.

“There is no way this tax competition can continue while the Eurozone is so desperate for cash, it is now not a case of ‘if’ but ‘when’,” he said.

“Ireland will be picked on, it can bluster all it likes but harmonisation will happen. We must question why Northern Ireland is so desperate to copy a system that is doomed to fail and does not work.

“Ireland has already had preferential treatment, it is time for Ireland to grow up and play its part in the international economy and to stop looting other European economies.”

That about sums it up.

How come they can assess Cameron correctly from New York?

Economics 1 Response »

Aug 192011

From the New York Times:

Britain’s urban wastelands need constructive attention from the Cameron government, not just punishment. His government’s wrongheaded austerity policies have meant fewer public sector jobs and social services. Even police strength is scheduled to be cut. The poor are generally more dependent on government than the affluent, so they have been hit the hardest.

What Britain’s sputtering economy really needs is short-term stimulus, not more budget cutting. Unfortunately, there is no sign that Mr. Cameron has figured that out. But, at a minimum, burdens need to be more fairly shared between rich and poor — not as a reward to anyone, but because it is right.

Quite so.

Well said.

Spot on.

And all that.

Except I mean it. Most emphatically.

The BBC’s economic commentary

Economics, Uncategorized 23 Responses »

Aug 192011

I received this comment today:

Richard, might I ask an unrelated question?

What do you think of the BBC’s current financial coverage? Do you think it is extensive, honesty, penetrating? Is it reflective of the real turmoil and double-dealing taking place in the City of London, or is it supine and obfuscatory? I as as I was stunned to find that the BBC had dedicated part of its website to asking which ‘cuts’ people felt the government should make; and this in spite of the fact that the banks had been handed trillions of pounds of taxpayers money? No mention was made of the fact that the private debt of the the banking sector was transferred to the public’s balance sheet – nor was there any mention that this private debt crisis, because it was shirted onto the public balance sheet, helped to trigger a fiscal and thence sovereign debt crisis! Do you think we are seeing honest reporting of events? If not, how do you think we can go about solving this problem?

Thanks,

Jonah.

So let’s start by saying the political right complain that the BBC is really left wing. And then let’s dismiss that because the right has now moved so far to the extreme that anything that is remotely reasonable (even Conservative) is extreme to them.

Now let’s view this objectively. And the answer is that the BBC’s performance on economics is poor. Nick Robinson’s objectivity as political editor has been widely questioned and focuses too much on, well, Nick Robinson if truth be told. No one is sure why he ignored the Murdoch hacking scandal for so long. I make the point to suggest there’s an unquestioning attitude pervading the BBC.

Robert Peston has a deeply annoying presentation style which I could forgive but he’s a) sensationalist b) therefore too interested in the moment and not in analysis and c) buys the City line far too much and readily, often showing weakness in ability to question or comprehend answers in the process. I’ve fisked more than one of his blogs in the past for precisely this reason. He buys the standard line that tax is a ‘bad thing’.

Stephanie Flanders is pure Institute for Fiscal Studies, and that means right of centre, buys neoliberalims lock stock and barrel, presumes tax is always a bad thing and generally lacks the objectivity required for the job because she comes, like all neoliberals, predisposed to an answer.

Paul Mason is a shining exception to all the above.

Are we getting what we deserve? No, we’re not.

The answer? Hard to say. The Guardian, New Statesman and others try hard to provide good comment. Channel 4 is always a better news programme than the BBC. But what we really need is better radio, more often, because that’s where these things get teased out best.

I often wonder if we now need the equivalent of US public radio with its eclectic broadcasting. Just a thought. And I appreciated the question.

QE won’t work now – only a Courageous State can

Courageous State, Economics, Uncategorized 5 Responses »

Aug 192011

The markets gave up their attempt to recover yesterday:

Source: FT

The flight to safety was vert obvious. US bond returns are their lowest for sixty years:

Source: FT

But no one is cheering. The reality is that the markets are failing to bounce. The springs are getting worn out. The realisation that there’s no growth to be had in world markets has dawned. The appreciation that universal application of government austerity programmes guarantees not just recession but possible depression has at last arisen. And the markets are saying ‘we’re in deep trouble now’ or words somewhat more robust to that same effect.

So what now? George Osborne will, of course, have us bunker down for recession -m which will not, of course be his fault. Except he blamed Brown for the last one and can’t avoid responsibility for this when on this occasion blame can fairly be apporetioned.

And some will suggest quantitative easing. But that wouild be a mistake. QE right now can only give banks money. Nothing can make them pass it on, and maybe people won’t ask them to do so – becasue there is no demand for borrowing at present as no one wants to inbvest.

There is only one way out. It is government spending that will save us from this mess. There is no alternative. I’ll say it until I am blue in the face, and don’t care how boring it gets. Saving jobs, realsing people’s potnetial, prioviding a future – these are all tasks for a Courageous State, and right now we have cowardly ones who will do anything but what is needed.

Yes, that’s a book plug. But I happen to think nothing could be more timely than the creation of a rash of politicians who believe that they have the power to solve this crisis – which as a mater of fact they have, and which only they can exercise.

This time we must nationalise

Banking 11 Responses »

Aug 192011

There are rumours - no more – that loans to ailing financial institutions are beginning again in Europe.

The Greek bailout is, by all reports, failing.

Markets are falling.

The underpinnings of the banking system are falling apart again.

Of course we can save the banks, again. We can print money. We will have to.

But this time let’s get real. This time we don’t lend them that money. Or give it to them as quantitative easing.

This time we nationalise.

This time we take control. This time we do so with the aim of cutting out the cancer. This time we do it for the long term. This time we don’t take the crap: the bankers do. This time, surely, we get it right. And this time we change the management, for good.

Surely no one can disagree this time, can they?

Morality demands rethink of UK – Swiss tax deal says Christian Aid

Uncategorized 15 Responses »

Aug 182011

Ministers should urgently rethink plans for a deal with Switzerland which would see UK tax evaders let off lightly while harming poor countries, says Christian Aid.

‘We fear that the agreement will be soft on the Britons who have illegally hidden billions in the Alpine tax haven but hard on developing countries, which also suffer from Swiss banking secrecy,’ said Christian Aid Director Loretta Minghella.

‘In a week when there has been a lot of talk in the UK – following the riots – of a moral deficit in society, it is extraordinary that the UK Government appears poised to let tax evaders off with nothing more than a regular tax bill.

‘People who have hidden money in secret Swiss bank accounts in order to evade their legal responsibilities to the UK will be able to escape unpunished and they won’t even have to reveal their identities to the UK taxman.’

The proposed agreement will lead to Britons with secret Swiss bank accounts starting to pay tax on them, which the Swiss will pass on to the UK – but crucially, without revealing those people’s identities.

Christian Aid believes the deal will seriously damage global efforts to curb tax dodging – a menace which it estimates costs poor countries $160 billion a year, far more than they receive in aid.

Germany is also reported to have initialed a similar deal with Switzerland.

Poor countries lack the political and economic clout to do such deals with Switzerland – but they too lose billions as a result of money being illegally hidden in tax havens.

And just like the UK, they need that money to fund vital public services such as schools, hospitals and justice systems.

Ms Minghella added: ‘I urge UK ministers to reconsider the Swiss tax deal as a matter of urgency.’

Christian Aid is calling on the UK and other G20 Governments to use their November summit meeting in Cannes to bring about an end to the tax haven secrecy exemplified by Switzerland.

Specifically, the G20 should broker a new system of automatic information exchange between Governments – including those of poor countries – to help them to detect when citizens hide wealth offshore.

There’s nothing the Tories are doing that can work

Conservatives, Economics 14 Responses »

Aug 182011

The unemployment figures yesterday appear to be nothing out of the ordinary. By that I mean there was no dramatic increase, and Osborne could even claim some new jobs had been created.

But that would be to misrepresent what appears to really be going on. The long term claimant count is steadily rising now. Whilst it is true that the total number of unemployed is not rising as fast, that is misleading. There are, approximately, one million people who are unemployed but who do not claim related benefits, for all sorts of reasons. These people are much more likely to take part-time, temporary, and low paid employment then those who are in the long-term claimant count. That is because the reason they are unable to claim benefits is because they are already living, in most cases, in households where there is a source of income. Therefore any additional and quite possibly part time income is likely to be much more attractive to these people than to those who are looking for a main income stream. And it is these part-time, temporary, and flexible jobs that are being created whilst long-term committed, well paid employment is being lost.

As David Blanchflower pointed out in a telling analysis in the New Statesman yesterday, this is reflected in the fact that there are vast numbers of working hours being lost in the UK economy even though the number of jobs appears to be relatively static. We are seeing a dramatic shift from full-time to part-time work, from high productivity work to low productivity work, and from, as a consequence, well-paid employment to marginal, low paid activity. To put it another way, as the true claimant count shows, the prospects of getting a job that are sufficient to sustain someone and their family in a reasonable standard of living are becoming remote for many.

This blunt statement of fact, because fact it is, is of enormous significance. The entire welfare programme of this government is predicated on the possibility of a person securing full-time, sustainable employment that will keep them and their family off benefits. Those jobs are not available.

And the entire thesis upon which the austerity programme of this government has been built is that as the government gets rid of full-time, reasonably paid, secure employment the private sector will rushing to create equivalent jobs and more besides, which will deliver economic growth, long-term prosperity and a boom time for all, crushing unemployment on the way. But as Larry Elliott points out in the Guardian this morning, that is also utterly untrue. Those jobs are not being created. The rising benefit claimant’s count is clear indication of that and also of the fact that it’;s not just the state that’s shedding these jobs, the private sector is too. The private sector is doing nothing to take up the slack in other words. It is feeling defeated by the economic environment in which we are living and it is now clear that there is no prospect of change. Worse than that, as this becomes apparent, the private sector is likely to shed more jobs because they now realise that there is no prospect of a change in economic outlook.

That now means that the two fundamental assumptions underpinning government policy have both failed.

There is no prospect of the private sector employment compensating for public sector retrenchment.

In addition there is no prospect of saving the cost of benefits by encouraging people back into work when there is none to be had.

In that case, George Osborne’s plans, and those of this coalition government, will fail. This presents two possible scenarios. The first is that the government will have to change plan, and that of course is possible, although the electorate almost invariably loses confidence in a government does a significant U-turn. The second possibility is that the government will not change its plans and we will face the most almighty recession, and significant poverty.

Of the options, I prefer the first. Of the two I think the second much more likely. It’s another reason why I’m worried.

ONS on the August labour market and how tax discrimination is likely to be distorting it

Economics, Uncategorized 31 Responses »

Aug 172011

I once claimed there were 7 million people in the Uk who were non-domiciled and was ridiculed for doing so.

This video suggests it’s about 6.8 million now.

I won’t make the obvious comment.

I will state the obvious fact that this should not give rise to a right to preferential tax treatment – but it does. Discrimination on the basis of national origin in this way is wrong. So why does the government do it? And why does it undermine the stability of the UK’s labour markets as a consequence?

Foreign aid isn’t working: take action today

Secrecy jurisdictions, Tax Havens, Uncategorized 27 Responses »

Aug 172011

We’ve known this for a long time. For every aid dollar that flows south, ten dollars flows northwards through illicit channels. The odds are stacked against sustainable development.

G20 leaders meet this autumn to discuss the world economy. The prospects don’t look encouraging, but this is exactly the moment when they should take action against the underlying problems, which means taking action against tax havens.

Our job is to encourage them to take the necessary steps. Watch this video, circulate the link to your friends and colleagues, and encourage them to take action here.