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?
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Until the 70’s, we didn’t, and some countries still don’t, so there is no moral or legal reason why the export of money could not be controlled once again.
Actually we do allow the free movement of labour.
David, some countries may still have exchange controls, but they are hardly thriving economies.
Let’s not go back to the pre-1970s and have restrictions on the amount of money we could take abroad for holiday and silly things like that.
In answer to your questions “Why do we……?” Simply, because the “we” that allow it are the people who control the world and the capital. The other “we” that you are talking about are the rest of us that have no power. That is the reality. We all just have to find a way to make a living within that reality.
Firstly, under the EU treaty movement of capital inside the EU is enshrined in law. So you would only be able to restrict non-EU capital flows. That means you coldn’t act unilaterally – you’d need to convince all EU countries to do the same thing otherwise cash could escape the via any EU country which still allowed free movement of capital.
Secondly, even if you could somehow make it work then no-one in their right mind would then invest in the UK, since they wouldn’t be able to withdraw their money. Or at the very least they would demand higher returns for their money to compensate for the reduced liquidity, which suck wealth out of the UK in higher interest costs.
You are arguing elsewhere for the Government to borrow more money to fuel growth. That money has to come from somewhere, and the largest sovereign wealth funds are outside the EU – China, Norway, the Gulf etc. It is those countries which we would need to finance the spending you think is so critical for growth, and discouraging them from doing so is probably not a good idea!
“Why do we allow the free movement of capital?”
Because we are members of the EU, one of the tenets of which is that the owners of capital should be entitled to invest wherever they choose and to withdraw their capital if they so wish.
@Jason Schwartz
Growth was considerably higher during most of the rea post war when we had exchange controls
And we avoided recession until the oil crisis of 1973
In the era of freedom of movement of capital we have had recurring economic crises, higher unemployment and lower growth
I do not see that as chance
The evidence os compelling
@MarkT
And my point is that philosophy is wrong and that the EU has been built on the basis of a flawed logic that threaten well being
Saying the law stops that is absurd
Law is a choice and can be changed
If it is not and people are oppressed then we are seeing what happens
Circumstances have changed post 2008 – the law needs to do so as well. In the light of evidence wise people change their minds
@Adam
Capital controls need not for a moment threaten government borrowing – of course consent would be given for it
The control would stop speculation and tax haven flows
@Jason Schwartz
Haven’t you noticed we are introducing more immigration controls?
What world do you live in?