Geogre Monbiot's recent piece is rather concerning....

[CHAPPERS]

To us, it's an obscure shift of tax law. To the City, it's the heist of the century | George Monbiot | Comment is free | The Guardian

Thanks DAVE!

 

[CHAPPERS]

*awaits Tory voters to explain why this is okay*

 

[crasher]

Not only that - but the British taxpayer is having to bail out a tax haven, the Turks and Caicos islands, that has effectively gone bust. This was revealed in that well-known lefty journal The Times the other day.

We have effectively reached the point where Governments barely matter any more - finance dictates what they do rather than vice versa.

I'm a political person but I find it increasingly hard to see who to vote for, or why I should bother.

 

[chops]

*awaits Tory voters to explain why this is okay*

Good luck...

 

[Dandyman]

Just to add to the fun while the Bankers are counting their bonuses middle earner families will face another Tory tax rise from April with all income over £37,400 up to £150,000 being charged at 40%.

 

[severnside gull]

Call Me Dave the architect of Bankrupt Britain (and the real beauty is that he can blame everyone else while he lines his own pockets without reproach)

 

[Jonno]

If Monbiot has got all this facts right here, which is not always the case, then it's disgusting and a real disgrace. How anyone ever thinks the Tories ever serve the interests of 'the people' is beyond me. I know Labour sold out to a large degree, but this is absolutely unbelievable. Appointing a committee on corporate tax consisting of the CEOs of some of the largest financial institutions around just stinks, ffs.........
Cheers for posting this, I would have missed it otherwise.

 

[beorhthelm]

it is an obscure bit of tax law, one only Geogre Monbiot seems to have worried about raising. either its a tidy up and wont make much difference to the overall tax receipts, or its a significant change and we'll see a massive multi-billion £ hole in the budget.

... middle earner families will face another Tory tax rise from April with all income over £37,400 up to £150,000 being charged at 40%.

thats the current tax bands. or do you mean the proposed reduction to of the 40% band to £35k, to pay for the increase of the tax allowance to £7,475? isnt that the sort of redistribution the left loves so much?

 

[D'Angelo Saxon]

I'm not a massive fan of Monbiot, but if he's got his facts right here, then its slightly worrying.

 

[User removed 4]

If Monbiot has got all this facts right here, which is not always the case, then it's disgusting and a real disgrace.

Correct, he hasn't got all his facts right

1. In David Cameron we have a leader whose job is to quietly legitimise a semi-criminal, money-laundering economy. This is part of a wider CT reform piece started the last government. Branch exemption has been coming for about two/three years. It follows on from the dividend exemption that came in under labour, and the capital gains exemption that came in under labour. To say it is Cameron pulling a fast one is ludicrous.

2. The new rules also threaten to degrade the tax base everywhere, as companies with headquarters in other countries will demand similar measures from their own governments. Most jurisdicutions already have a branch exemption (France, Germany, Nethelands etc etc etc etc). Other governments will not be having to change their legislation to catch up as he suggests. We are changing ours (finally) to get in line with them.

3. These measures will drain not only wealth but also jobs from the UK. The new legislation will create a powerful incentive to shift business out of this country and into nations with lower corporate tax rates. One of the main reasons this was brought in was people simply moving entire groups out of the UK. It is a piece of piss to do. If anything this will stop people moving out of the UK. I doubt there will be any serious amount of business moving as a result of this as they could have moved the entire group before without much difficulty, so why now move a part?

4. Anti-avoidance legislation is in place to stop people taking the piss.

5. Foreign means anywhere. If these proposals go ahead, the UK will be only the second country in the world to allow money that has passed through tax havens to remain untaxed when it gets here. The other is Switzerland. Dross, if the income in the haven does not have a commercial purpose it will still be taxed in the UK, see 4. Plenty of other countries have similar arrangements, the Netherlands for example.

 

[Dandyman]

it is an obscure bit of tax law, one only Geogre Monbiot seems to have worried about raising. either its a tidy up and wont make much difference to the overall tax receipts, or its a significant change and we'll see a massive multi-billion £ hole in the budget.




thats the current tax bands. or do you mean the proposed reduction to of the 40% band to £35k, to pay for the increase of the tax allowance to £7,475? isnt that the sort of redistribution the left loves so much?

You are right that the 40% rate will kick in at £35,000 (which follows on the hike in regressive tax in the form of VAT to 20%). National Insurance rates also increase.

There is no rise in tax for earnings over £150K and no acknowledgement that there is a work of difference between those on £40k and those on £100k in terms of real wealth.

You are right that the level of personal allowance goes up but that applies to everyone not just the low paid. If the rich were not effectively being subsidised by the rest of us we might afford some real redistribution.

 

[CHAPPERS]

Thanks Bushy.

Was hoping there would be discussion on this as with Monbiot it's never all it seems.

 

[chops]

But as soon as you grasp the implications, you realise that a kind of corporate coup d'etat is taking place.

Nothing beats a bit of hyperbole eh George.

Also, if his statement that companies will pay no tax in the UK on profit made abroad (Which apparently isn't correct), surely the statement he follows with, that companies will leave the UK, simply doesn't make sense?

 

[Was not Was]

People are bound to challenge some of the detail and also GM's hyperbole (rightly so - this is clearly not something sudden like a coup d'etat, but part of an ongoing pattern). Even so, it's hard to escape the impression that over the past decade or two, the state has become in thrall to the bankers and the financial services industry.

What really worries me is that, since the Guardian published this during the week, apart from a single mention from Ed Balls of 'tax cuts for the banks' in passing when commenting on Osborne's tiny bank levy, there has been no follow up until last night on 10 O'clock Live on Channel 4.

I'd hope that even the likes of Bushy, who disagree with Monbiot, would agree that this is important stuff that relates to how we manage our economy, and that it should be higher profile - and the government be challenged more - than is currently the case. It's pathetic that we have such weak political opposition in this country, and such weak press scrutiny, that the most substantial challenge to key govt policy is coming from a satirical show on Channel 4.

 

[Buzzer]

The legislation is being brought in, broadly to unify the different tax treatment of dividends from foreign subsidiaries which are free from UK tax and profits from foreign branches. My understanding is that it was to prevent profits being diverted to exempt foreign branches. The latest proposals, which Monbiot seems to have missed also state that "No relief will be available for foreign branch losses"

http://www.hmrc.gov.uk/budget-updates/autumn-tax/tiin1030.pdf

I must confess that I don't know the full ins and outs of it as it is not my area of expertise (even though I'm an accountant by training). I think therein lies the problem with the article. It's a piece of legislation that is obviously a very technical one and needs clear and concise explanation for us mere mortals to understand. Instead, we get heavily laden hyperbole and clear political bias - "Dirty Oil Plc", "dismantling the NHS" and to finish with "you don't lambast single mothers or refuse to apologise for Bloody Sunday. You assuage, reassure, conciliate, emote. Then you shaft us." has just turned what could be a serious piece into a lefty rant.

Poor show, Monbiot.

 

[Simster]

As far as I can see, this sort of pandering to the financial services sector is to be expected from any government. At the end of the day, we don't actually make much anymore, to the extent that just under 20% of the nation's GDP is now generated by The City. Yes, 20% of our income is made by offering financial services to the world at large and charging a little commission in doing so. Great.

The problem with this is that we are now overreliant on this industry sector, and our government has to react to incentives offered by other governments to the sector, or we lose our competitive edge. And as Buzzer has alluded, this is all too easy seen - so many companies have shifted HQ to Ireland (& others) in an effort to minimise their tax bills.

What is the solution? Well I'd have thought it was to diversify the nature of our output as a nation. However, I don't see that any government has made strides in this direction since the the 60s or 70s. But something has to change, we can't sit back watching the rich get richer at the expense of everyone else, surely?

 

[Herr Tubthumper]

so many companies have shifted HQ to Ireland (& others) in an effort to minimise their tax bills.

How many have done this? This is always thrown around as an arguement for lower corp tax but only recently JP Morgan (who are a fairly big bank) cemented their position in the UK by buying a big building in Canary Wharf. The head-honcho stated that moving from the UK was not an option as he employs the best people on the best money and the best people want to live in the best places i.e. London. Same article suggested that flight is not as greater threat as people make out, as all manner of ties keep some companies here, good people will not want to move, and space can be filled by other groups growing.

 

[Dandyman]

As far as I can see, this sort of pandering to the financial services sector is to be expected from any government. At the end of the day, we don't actually make much anymore, to the extent that just under 20% of the nation's GDP is now generated by The City. Yes, 20% of our income is made by offering financial services to the world at large and charging a little commission in doing so. Great.

The problem with this is that we are now overreliant on this industry sector, and our government has to react to incentives offered by other governments to the sector, or we lose our competitive edge. And as Buzzer has alluded, this is all too easy seen - so many companies have shifted HQ to Ireland (& others) in an effort to minimise their tax bills.

What is the solution? Well I'd have thought it was to diversify the nature of our output as a nation. However, I don't see that any government has made strides in this direction since the the 60s or 70s. But something has to change, we can't sit back watching the rich get richer at the expense of everyone else, surely?

Spot on.

This may explain some of the reasons why the Tories will do nothing to rein the City boys in:

City bankrolled Tory election campaign | Politics | The Guardian

 

[Buzzer]

How many have done this? This is always thrown around as an arguement for lower corp tax but only recently JP Morgan (who are a fairly big bank) cemented their position in the UK by buying a big building in Canary Wharf. The head-honcho stated that moving from the UK was not an option as he employs the best people on the best money and the best people want to live in the best places i.e. London. Same article suggested that flight is not as greater threat as people make out, as all manner of ties keep some companies here, good people will not want to move, and space can be filled by other groups growing.

Off the top of my head:
Beazley Furlonge Plc
Charter Engineering Group
Henderson Asset Management
WPP
Shire
Wolseley
Informa
United Business Media

Not sure about AstraZeneca, GSK or International Power but was being discussed openly at board level for all 3 when I read an FT article on them. Only a month and a half ago the CBI were warning the government that companies will continue to move: CBI's chief says tax system puts UK companies at disadvantage to rivals - Scotsman.com Business. Can't find it anywhere but there's a whole host of other FTSE 250s that have done the same.

Regus moved to Luxembourg a few years ago and in the last few years Google, Yahoo, Electronic Arts, Kraft have moved their European HQs from the UK to Switzerland. Cisco, Nike, Gucci and Starbucks have opted for Holland and there's a few others I've forgotten. I shudder to think how much tax revenue has been lost just in that list. Easily in the billions.



Edit - these companies have not 'relocated' really. Many of them have moved a few administrative roles (finance, HR, Marketing) to Ireland and they are obliged to have board meetings there too - so once a month they all get on a plane, go to an office by Dublin Airport, rubber-stamp the decisions mooted at previous sub-board meetings and then get back on the plane and home. It really is that easy.

 

[Simster]

As far as I'm concerned, Monbiot's piece is an honourable and reasonable piece of investigative journalism with a few holes and sprinkled with rhetoric that identify his own politicial leanings, but we're going to need to see a lot more of this before people finally wake up to the fact that we need to start investing in non-financial industry sectors, so that tax laws can be applied fairly without compromising our competitivity as a nation.

And being practical about it, that could mean investing in proper apprenticeship schemes at a government level, better tax incentives to encourage industry into our deprived areas, tax relief on certain types of training etc, yet all I see from this government is a cut cut cut mantra.