I am giving evidence at the Treasury Select Committee this morning. The call paper is here.
Then I will be briefing journalists before dashing to City University to teach for three hours after which I am meeting a friend for supper before a late evening return home.
If the blog does not run as normal today now you know why.
And I may take a lie in tomorrow morning.
Although I suspect I'll fail at that one: I usually do.
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Just listened to the select committee audio report. The enthusiasm and passion for your subject is terrific, how you can express yourself so articulately at such speed is pretty damned impressive. A little pomposity from some of the questioners but there you go. Enjoy some leisure time at the end of your busy day.
Thanks
Can be watched here:
http://parliamentlive.tv/Event/Index/13b387f0-07b3-491f-8689-be38cf808b8e
Jacob Rees-Mogg is always good for a laugh – usually for all the wrong reasons!
“No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer’s pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue” – Lord Clyde in the case of Ayrshire Pullman Motor Services v Inland Revenue [1929]
Your reply was excellent I thought.
Sadly it is precisely because of the likes of Rees-Mogg and his investor/inherited wealth class that the tax laws have so many loopholes in to allow the type of avoidance he very much wants to keep. He is an embarrassment to the good (non-landowning aristocracy) people of North East Somerset – in my view anyway!
Jacob and I have history
He did seem to be getting a bit personal in his barbed comments at one point!
George Monbiot has an excellent article today on taxpayers subsiding the oil & gas industry – no doubt Jacob would be in full support of this form of socialism (to protect his investments of course)
http://www.theguardian.com/commentisfree/2016/feb/02/cheap-oil-taxpayers-crisis-bailouts-fossil-fuels
I am sure he would
“no doubt Jacob would be in full support of this form of socialism”
Indeed…it’s known as reverse socialism. I think Nick Kaldor used this term or something similar in his withering attacks on Thatcher and Monetarism from the House of Lords in the early 80’s. He was very witty and scathing and talked of Tory policy ‘as if the workers were taking the surplus value of the capitalist.’ Kaldor was a great man history has shown him to be on the mark.
wow richard , you didnt look too good . i thought it was my screen but you looked very red and spooty . hope you are ok .
That’s a skin condition – and my pharmacy failed to get new supplies of cream needed to control it – so has flared in last few days
Not psoriasis is it , Richard. A friend of mine suffered with it -it more or less covered his body. I’ve heard acupuncture can be very helpful in skin conditions which are often very persistent. Worth a try especially if you are using a lot of steroid based creams like hydrocortisone.
No, not psoriasis
One MP appeared to ask about the proportion of profits each ‘taxable activity’ would attract according to the unitary tax principle. I am not sure you answered this question directly but I got the impression that the proportions would be based on a simple formula.
For example if there were three kinds of taxable activities (employees, customers, etc) then a third of the global profit would be allocated to each kind of taxable activity. Then each country would get its share of the global profits according to the amount of each taxable activity occurring within its borders.
It is not obvious to me why the profits should be allocated to each kind of taxable activity using such a simple formula, or why every country would accept any particular formula.
Why not?
It’s better than what we have now
And you have understood it correctly
I am not sure how there would be international agreement on what the categories of ‘taxable activities’ should be.
Suppose people in one country only bought the good (or service) by clicking on a ‘buy’ icon. Then suppose people in another country only sold the good by registering the purchase and people in a third country only dealt with the picking and despatch of the good. Then there is the manufacture and the on-line advertising and the original development of the good, etc, etc.
Each country would want to have a different kind of categorisation in order to get as much tax as they could. So how would they all agree?
If we can get transfer pricing agreement this is a doddle
Thanks for your replies Richard. I am new to these ideas but beginning to see the light!
So transfer pricing is normally used in ‘arms length’ calculations to calculate a virtual profit. But these prices are established within a range of accuracy. So making prices low allows them to match the costs and thereby make profits disappear.
If I understand your last reply correctly, you are implying that transfer prices could be used differently. They could be used to establish the value of a subsidiary company’s activity, which could then be used to apportion part of a multi-national group’s global profit to that subsidiary.
I can see that this alternative use of transfer prices would result in less distortion. The full transfer prices would be used instead of the difference between them and the costs.
Unitary tax is not a transfer pricing mechanism although it approximates to one such system which is called the profit split method