I'm in a hurry in a Parisian hotel room. When the Chancellor will be speaking today I will be at the OECD. I will miss at least four broadcasting opportunities. Country-by-country reporting demands it. But what would I have said in the few minutes that any broadcaster gives at best. These are some thoughts.
First, if Theresa May really meant she was governing for everybody she should have re-read her Adam Smith and realised that tax has to be equitable: the bill has to be biggest for those most able to pay. That is not true in the UK. We have a ridiculously low corporation tax rate, and capital gains tax is much the same. Inheritance tax is almost wholly avoidable for the richest. And we have no wealth tax. And yet she's hitting some of the least well off with more cuts, is targeting the disabled (yet again) and the tax avoidance effort is being aimed at the self employed who do at least already pay. She's like Arsene Wenger when playing Bayern Munich. She gives an open goal to abusers whilst punishing those she wants to support her. This is incoherent tax policy.
Second, this should be a budget for spending: masses of government spending financed by near zero cost borrowing. Any business person would agree. But it's not going to happen. Just when we have the chance to start building the post Brexit economy we won't. As an economist it's almost painful to watch such incompetence.
Third, targeting the self employed working for the government as tax avoiders when the same measure is not being applied to the private sector shows that all credibility has drained from the tax system. tax is dependent on there being a level playing field. May and Hammond are destroying it. This is bad for tax, it's bad for HMRC, it's bad for Britain and it's and for public services. That's some achievement.
Fourth, the real abusers are still getting away with their activities in the UK and that's because the government will not invest in HMRC and it will not enforce company law to make sure that all companies file their accounts and tax returns. 400,000 (at least) a year do not and they are almost guaranteed to get away with it, completely. They are who the government should be cracking down on, but it would require a bit more spending to recover the billions that go missing. So instead honest taxpayers are punished, we have continuing austerity and a tax system that is falling apart. How this government got a reputation for competence is hard to imagine.
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Austerity is never-ending. No light at the end of the tunnel. No jam tomorrow for the just about managing or those not. Despair in public services. Brexit car crash.
I despair when I reflect how in my post-WW2 lifetime Germany has done so much better (economy, trade, equality, taking in refugees, plus reunification) than the UK. Bayern Munich 5, Arsenal (twice) – a symbol for our times.
Much of our improved car industry comes from German investment.
Michael Hudson in a recent article on the role of government deficit spending says we live in an Age of Deception. This is an age where the chief task of politicians on both the left and the right is to herd up the economically and monetary illiterate masses to vote against their best interests:-
http://michael-hudson.com/2017/03/why-deficits-hurt-banking-profits/
I have to say that watching Hammnond on TV I’m sure his nose got slightly longer after he had finished.
This was the most mendacious budget sppech I have ever witnessed.
‘Hard working people’ and ‘investing in the future of our children’ my arse.
At least Osbourne was honest about his economic depravity.
Hammond delivered nothing but sugar coated razor blades.
Arsene Wenger has a degree in Economics I think.
Can anyone explain how it is that Germany has recorded its second budget surplus ? And yet they have absorbed thousands of refugees.
Investment
Investment
Investment
Not to forget the benefit they’ve enjoyed from their greatly undervalued currency. The fact that this is also contributing to the ruin of half of their partners in the Eurozone is clearly of little concern to our Teutonic friends. As far as I can tell, their viewpoint seems to be, ‘Why can’t everybody run a huge trade surplus like us?’
Correct
Correct
Correct
“if Theresa May really meant she was governing for everybody”
gosh there goes another pig flying past the window doing a barrel roll & winking.
May & the rest of the wretched gov’ are:
people talking without speaking
whilst also being
people hearing without listening
as you mentioned in a previous blog: the tory party are only about power. staying in power – nothing more, nothing less & they have zero interest in the well being of the UK pop’ only in so far as the pop’ keeps voting to keep them the tories in power.
The crackdown on IT consultants and contractors in IR35 one-man service companies working in Whitehall can only benefit the big consultancies, who have a salaried workforce and vast cubicle farms in Bangalore…
…But they, too, employ a lot of contractors in umbrella companies and IR35 service arrangements.
I wonder if it will apply to them, too: or is it just for direct-hire contractors in the public sector?
A cynic would look to the incentives that precipitate such policy ‘initiatives’ and draw extremely unflattering conclusions.
Whitehall will, of course, be the loser. The reason they pay contractors is simple: they can’t get the skills in any other way, the pay scales in their in-house salary structure are far, far, far too low.
Whitehall (and other arms of government) aren’t alone in this: IT contracting exists, in the main, because very few organisations can bring themselves to pay a technically-valuable employee more than a middle manager. Or even the most junior manager, in the most hierarchical companies.
The civil service is twice afflicted: hierarchical by culture, and bound by statute into inflexible pay structures.
So they’re screwed, and their only source of IT competence is the big players, who have their own agenda and a consistent record of subverting and seconding the senior management.
One of the lesser-known functions of a direct-hire consultant is that he or she can be paid to report impartially on a failing project – or impartially enough: they know who’s paying, and they are loyal enough to that.
I’ll leave that observation out there, and warn you all to be extremely careful in your comments.
Meanwhile, the tax arrangements for directors of the big consultancies who perform the lions’ share of Government IT work will remain above all scrutiny. Some of those arrangements are exotic and unrecognisable as ‘paid employment’: they are, writ large, the very same accounting fictions we are ‘cracking down’ against, amongst the everyday contractors.
The big consultancies are not impacted, of course
But they become tax preferred umbrella companies as a result