The G7 tax agreement reached at the weekend continues to attract attention, and rightly so.
One dimension that has now been noticed by Chancellor Rishi Sunak is one that I drew attention to almost immediately, which is that the so-called Pillar 1 aspect of the deal, which reallocates part of the profits of companies with greater than 10% profit margins to the countries where their customers might be located, will have a significant impact on banks, where profit margins in excess of 10% are commonplace. For a deal supposedly aimed at tech this one brought in much of the financial services sector as well, although not inappropriately. My own research has shown that profit shifting for tax is widespread in this sector.
Sunak's prediction is what might now be called typically British. As the FT noted, having signed the deal he now wants to change it. As they say:
Sunak said the weekend's “historic agreement” by G7 finance ministers would force “the largest multinational tech giants to pay their fair share of tax in the UK”. But one official close to the talks said the UK was among the countries hoping “for an exemption on financial services”, reflecting Sunak's fears that global banks with head offices in London could be affected.
It takes a special sort of ability to not know what you are signing, but it is one which this Cabinet has perfected.
And for a former City banker who made much from the 2008 crisis it takes some considerable level of financial ignorance to not see the implications of the deal for banking.
But apparently, Sunak was unaware of what he was doing and is now regretting it.
I predicted that the Big 4 accountants would be working hard to undermine this deal. Now expect Sunak to give them a contract to do so, but not publish the details, of course. It would fit the whole government modus operandi if such a thing were to happen.
And will there be a back-tracking? I think you can take it as read that there will not be. There will instead be more spectacular own goals like this, to add to the pile already accumulating from Brexit.
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[…] Rishi Sunak really is seeking all the headlines today, and all for the wrong reasons. The FT has noted he did not understand the tax deal he signed at the weekend. And now he and the Treasury are really […]
It did take me chuckle.
What is the half-life of a government policy before a U turn or pleading for “special treatment”?
This just shows that all those steeped in the dogmas of this mis-named neoliberalism are really struggling. There seems to a be a total lack of understanding among those wielding political and economic power in the other western advanced economies of the extent to which the Biden administration is pivotting determinedly away from neoliberalism. In fairness, there has been some previous tentative movement in Germany away from its anally retentive fiscal rectitude and its baleful mercantilist ordo-liberalism – the Merkel-backed EU Covid Recovery Package is evidence of that, but most of the others are still at sea. Our benighted government is floundering more than most.
The pushback will be ferocious from those exercising economic and organisational power, but I expect the Biden administration to prevail over the long haul.
Typical PR window dressing – saying they’ve done something that they have no intention of doing as far as I am concerned.
As we know – the Tories are conmen/conwomen – ‘Con’ is the first syllable in their official name after all.
Here is how the British Government works. First it signs an agreement. Then it seizes sole credit for its triumph, which it megaphones to the whole world. Then it repudiates the deal; then it demands to renegotiate the agreement. Meanwhile it refuses to be interviewed by any journalists capable of interrogating it (the British Government refuses to submit a spokesperson to explain some policy problem to C4 News or BBC Newsnight, every single day).
Correct
I suspect that the rest of the world can see it too, at least the bits that matter and are interested.
So they will not trust Johnson and his government one inch
Drunken Cowboy shooting Sunak didn’t know? My arse.
I refer us all back to his first budget and the 25 mile/40km extension of Freeport’s. Isn’t there a line in there about Banking?