As the FT reports this morning:
George Osborne's “shares for workers' rights” initiative could end up costing Britain £1bn a year in lost revenues, the Office for Budget Responsibility has warned, at the same time as the government battles to clamp down on tax avoidance schemes.
The long-term potential cost of the chancellor's policy, buried in an annex to the Autumn Statement's costing documents, is likely to fuel controversy over the employment initiative that got the go-ahead last week in spite of a poor welcome from business.
Paul Johnson, director of the Institute for Fiscal Studies, the independent think-tank, attacks the government in Tuesday's Financial Times for condemning tax avoidance as it “prepares to put another billion pound lollipop on the table”.
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On one of the news channels last night, it was suggested Cameron will be promising another Tory initiative, this time a referendum on the EU-but not an in/out one, just on terms of membership. The story is one of repatriating powers, good nationalistic stuff. I can’t help wondering how connected it is the EUs plans to limit tax havens.
@ Ian Stevenson – Ian, I’m sure you’re right, ultimately, but I suspect the more proximate reason is the thrashing the Tories received from UKIP in the three recent Parliamentary bye-elections – 5th behind Labour in Rotheram, with UKIP second; 4th behind Labour, with UKIP again second; but managing to come second behind Labour in Croydon North, but still with UKIP third.
Richard knows my views on this, and I more and more believe the Tories will go into the next Election on an in/out EU Referendum manifesto promise, hoping to draw in UKIP and disaffected Labour voters, to win an absolute majority, to finish their project of demolishing the Welfare State, which achieved, it will hardly matter if were in the EU, or a suburb of Wagga Wagga, as the game will be over, and welcome to the Neo-Feudal state, and the “Blade Runner” society of Ayn Rand’s dreams.
im confused, are you saying that employees taking advantage of this relief are “avoiding” tax?
Im still baffled by what the relief is for to be honest, what employee is going to give up all their employment rights for these shares?
I am saying this could easily be used to avoid tax, yes
I think the tax avoidance won’t be by the employees but by the employers. They will benefit from the schemes that will be created.
Agreed
But also artificial employments look very, very likely to me
And I’ve read the draft legislation
I haven’t seen much comment on the actual details of the scheme, but it is obvious that were an employer to agree a price to buy out his or her employees’ redundancy rights, it would only be for a small sum.
In the private sector, worker’s would be lucky to be entitled to so much as six month’s pay on redundancy.
Suppose, then, that 10% of the workers would be ultimately made redundant ( seems a high number to me). The value per employee of the redundancy rights is thus 0.6 month’s pay.
I doubt if anyone would be willing to give up his or redundancy rights for so little an amount.
Hence, no one will use the scheme for its stated purpose.
If it has a use, it will be for people swapping taxed income for untaxed share awards-i.e. an avoidance measure.
The unemployed will be forced to use it on pain of losing all their benefits, including housing benefit, if they refuse. People are being kicked out of paying jobs and forced to work either for nothing or without rights, which will no doubt amount to the same thing. A neofeudal society is being created around us, from us.