Saturday, 26 January 2013

Another Slice of the Golden Goose

This week David Cameron decided it was time to stand up to aggressive corporate tax avoiders to mixed reviews. Some companies complained of the added cost of being forced to publish their basic tax positions. This sounded a lot like saying "we'd rather you didn't know" since they already produce annual reports and statistics for various bodies, not least of all their shareholders. I can't imagine it would take an intern more than a day to look at the column in the excel spreadsheet that says "UK taxes paid", divide it by the column that says "UK profit" and multiply by 100. That would go some way to satisfying the desire to check tax is being returned in reasonable proportion to the country of the citizens who funded the profit.

Really the only people who are going to whine about this are indeed 'doing a Starbucks'. I don't think it's morally wrong - that's not important, and it's an opinion of which DC should have but didn't steer clear. As I've said before, a company owes it to its shareholders to maximise profits; this includes getting staff to work for as low a wage as they can reasonably offer, buying raw material cheap, selling product as high as they can and paying as little tax as they can whilst complying with their legal obligation to pay full tax in whichever jurisdiction their company structure allows.

Some people like to bang on about moral obligations - the 'fair share' tax lobby for instance. I, for one, think that's a load of old cock. Companies should behave in a moral way, but legally minimising one's tax bill (as anyone with a personal ISA or parents who pay into their children's ISA or child trust fund is) does not contravene moral behaviour. We're talking about not paying exploitatively low wages, not using child sweat shops, not trading in blood diamonds - that sort of stuff.

Trying to go the Clegg route of minimum effective rate of tax is not going to work. I think, for once, there is some merit in the idea, but actually far more applicable to personal not corporate tax. We can investigate that one another day. The main point though, is that this hasn't been thought through - like everything that leaves the Lib Dem leader's mouth. Putting aside the potential resulting disincentive for businesses to operate in a country that doesn't allow very effective (read: "aggressive" in today speak) tax avoidance, the law would be too complex and probably very easy to get around.

The far more obvious route to go is public pressure - look at Starbucks. If you make everyone show they're playing fair, consumers can talk with their wallets and not patronise those companies who they think take too much in profit from their country and return too little in tax. That's what DC is suggesting and makes sense - I just wouldn't have framed it in the somewhat anti-business rhetoric he did.

It is up to him and his Chancellor to set rates (and corporate tax rates are not the only relevant business tax - many others have been rising to offset the decrease in the headline corporation tax rate) that attract people to pay their tax bills in the UK. The key is being cheaper than the financial cost of setting up an avoidance system and the reputational cost of being exposed as an "aggressive tax-avoider".

But I've said most of that before. What I really wanted to talk about was how popular tax avoidance rhetoric is these days. So much so that Andy Burnham, the shadow health secretary has tried to jump on the band wagon with his new target. There is a group of people out there engaging in a disgusting tax avoidance scheme. They make Jimmy Carr look like Lord Sainsbury. Who are these people refusing to pay their fair share? Old people who refuse to get dementia.

Bastards. Old, fully-marbled bastards.

Let me explain, Manuel…

Labour have not learned that our money is not their money. Still. So they are trying to revive their "death tax" in response to the Coalition plans to introduce the social care cap (which looks like it may be the first actually well-thought out policy of this Parliament). Yup, beyond the already monstrous theft that is inheritance tax, Labour would like to take some more of your already taxed money to pay for the care of the elderly. Regardless of whether you ever need any yourself.


Having grasped the wrong end of the stick, Burnham thinks the extensive reviews into how to save those unfortunate enough to require care in their latter years from liquidating often their only asset which they have spent a lifetime paying for is actually an excuse to tax everyone some more. He and his moronic pals have thought this would be an excellent opportunity to make everyone pay an extra 10% of total estate on death to pay for someone else's care.

Now I have already written about the dubious script that everyone seems to accept unquestioningly that elderly care required for age-related illnesses (e.g. dementia) is somehow different from infant care required for age-related illnesses (e.g. premature babies and various infant conditions). Because it is apparently different, the latter is free at the point of delivery having been paid for by general taxation budgeted to the NHS. The former though is apparently something different - an optional extra like reverse parking sensors, built-in GPS or heated seats. Therefore it is something we all have to pay extra for if we require it.

Now you know I accept there is not enough money to pay for everything - it's why we don't have 10,000 uber-hospitals with 1:1 doctor:patient ratios and 15 minute waiting lists. I just think we don't present this one in the correct light - call it what it is. We have to charge people for elderly care because there's no money left. That's because we spent rather than saved whilst the sun was shining. We failed to recognise the burden of population growth. We sold all our gold at rock bottom. We raided our pensions. We sold all our Government assets to pretend we had annuitised income to spend on buying elections when really we were reducing our capital base and often then decimating our 'earnings' in a very short time renting back the assets. For 'we', I think you know what to replace in its stead…

Now Burnham and Labour think on top of all the taxes we pay through our lives, when we get to the end we should then pay another great whack to pay for extra care that should have already been covered by our taxes but instead was squandered by a Labour government who tripled NHS spending without improving anything because more money for granny's hip and little Timmy's asthma was a good news story. Apparently, having to pay the social care cap (or insurance premiums to cover it) is forcing people to pay a 'dementia tax'. Therefore those people who have the audacity, nay the temerity not to suffer in their old age are avoiding this tax. And that's not 'fair'. So let's tax them some more. It's always the answer.

Hopefully Labour will make this anti-tax avoidance message central to their election campaign. I think we'd all sleep a lot better in our beds at night knowing they will never get near Government with it.


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