Polly Toynbee makes a call for tax to be centre stage in the next general election,and thereafter, in the Guardian today.
Of itself this is not a surprise, and nor is the fact that Polly quotes me, amongst others, surprising either. But some of those others are more surprising. Polly quotes a Sheffield firm of accountants who have had enough of under resourcing at HMRC, and rightly so. I recognise what they say, as many in the accountancy profession will.
She also quotes Michael Heseltine, not noted as a tax reformer. The question he asked Polly when discussing companies who tax abuse was, apparently, “Go after them! How many gunboats has Amazon got?”
His implication is very clear: he believes that the government, and HMRC in turn, have been far too timid in challenging such abuse. I agree with him. The lack of willing to take on international tax abuse precisely because it is international is, in my opinion, absurd. So, the sentiment expressed in the General Anti-Abuse Rule that it cannot be used against such activity is also, in my opinion, wrong (and yes, I acknowledge I was on the committee that both helped write and approved those rules). International tax rules only have impact because of domestic law, and as such abuse of them is a matter for domestic law. A proper General Anti-Avoidance Principle would provide the means to tackle such abuse, in my opinion. Polly notes my view.
She also notes my support for extending national insurance to investment income. Here, unfortunately an extra zero has crept into the Guardian copy. This will not raise £40 billion. Cautiously it may raise only £4 billion after exempting small receipts and those of some pensioners, but the impact will be bigger. A great deal of tax avoidance is still focussed on national insurance. This would stop much of that in its tracks.
Then we might get business focussing on more important things, like productivity, making things people want, and investing for the future. Right now far too much business advice is simply about how to reduce tax payments. When that whole scenario changes to a situation where people seek advice on how to boost their incomes by doing things better we might see a real gain to the UK economy. Without reform on tax that is not going to happen. That's a very good reason why tackling tax abuse should be so high on the agenda now.
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His implication is very clear: he believes that the government, and HMRC in turn, have been far too timid in challenging such abuse. I agree with him. The lack of will to take on international tax abuse precisely because it is international is, in my opinion, absurd.
Not absurd. It is rational, but it is wrong, and there is a distinction.
The fact is that there are now bodies in a position to force governments to break their own constitutions – as is happening in Uganda with Tullow Oil – and that certain of these bodies, like the International Centre for The Settlement of Investment Disputes (ICSID), based at the World Bank in Washington DC, are apparently accountable to no-one. This is something that would give even courageous politicians pause for thought – let alone Chicken George.
To be clear:
Your blog about why tax abuse needs to be tackled, takes as it’s support, the views of Polly Tonybee (a non-expert) who is simply reiterating your own views about tax abuse.
Self-referencing your own opinions is hardly providing a compling case, is it?!
I claimed no support from Polly per se
I did claim from those she interviewed
But I suspect nothing Polly or I will say will ever be credible in your opinion, so frankly I give it rather less weight than I would a non-expert seeking to form an objective view
Interesting that PT manages to make an error of £36bn which has apparently ‘crept in’ but casts no doubt on her ability to comment on these issues.
Also – PT never comments on the Guardian’s tax avoidance (abuse in your terms)but rips into everyone else who complies with the law e.g. Amazon, who don’t make much profit so don’t pay much corporation tax. Shouting ‘but they sell lots’ is just a complete nonsense.
The first is the sort of thing that happens in all papers
The second is an issue I have commented on so many times that it is not worth saying again
Likewise Amazon
Frankly, it really is time for you people to grow up because it is a quality that really does seem to have evaded you. Some of us live with all the realities, contradictions and ambiguities of the real world. It appears you are quite incapable of even realising that they exist
Realising that you often speak in contradictions (when it suits) is so stent to many of us!!
I don’t speak in contradictions
I am simply aware that life is a lot more complex than right wing market fundamentalists think it is and that there are many more shades of grey than you ever think possible in your binary world view that bears no relationship to reality
I agree that the opportunities for abuse/‘planning’ presented by NIC should be removed, but fail to see why extending the scope of NI is the way to do it. It should be merged with income tax. I seem to recall that you’ve expressed opposition to that idea, but perhaps I’m wrong?
I realise this presents some issues around pensions/pensioners, but don’t see why they can’t be dealt with in a manner which brings the UK system into line with other countries – most of which don’t have two seperate income tax regimes operating simultaneously. If it means that pensioners with higher incomes continue to pay a higher level of tax than they do at present then, to be honest, I’m not overcome with sympathy.
Employer NIC presents a different issue because there wouldn’t be a like-for-like substitute for the revenue (absent a much wider reform of tax, which isn’t happening). If it was continued after scrapping the employee bit then that would be an improvement.
If NIC, IT and benefits were merged I see the point.
Miss out benefits and I see some benefit to the contributory principle
I also happen to think IT and NIC merger nigh on politically impossible as yet. So I prefer pragmatic steps
There is a case for deconstructing Gordon Brown’s cheat by pretending that an increase in NI rates that applied above the NI ceiling is not an increase in income tax.
However it is completely ridiculous to propose charging NI contributions on investment income to pay for unemployment benefits (or means-tested benefits for which 99% of those receiving investment income are ineligible), which have no direct impact on said investment income – especially since a disproportionate amount of investment income accrues to pensioners who are not eligible for unemployment benefits. If you want impose higher taxes on investment income, why not just reinvent the investment income surcharge (aka the earned income rebate that applied when I started work)?
Despite being exempted (due to my grey hairs) from paying NI Contributions, I think that the fake increases in NI contributions under Brown should be recognised as income taxes (which would cost me a bit). I fail to see why those over 65 and the self-employed should pay a lower rate on investment income than employees.
The two are akin
They are both taxes
“International tax rules only have impact because of domestic law, and as such abuse of them is a matter for domestic law”
You have completely misunderstood the law of treaties – you should try reading the OECD MTC sometime.
I have read this material
I am also well aware that the OECD is suggesting stronger CFC rules and GAARs, both domestic law, to tackle abuses.
So shall we get real?