Starbucks,BBC and tax avoidance.

As if we didn`t have enough ridiculous rhetoric from this government about tax avoidance, with the "smell the coffee" nonsense being the most apposite, we now have Starbucks telling us they`re moving their European headquarters here because of "the progress London has made around coffee"! Is this really "another boost for London", or does it perhaps have more to do with a company wishing to repair its damaged reputation, whilst taking advantage of Osborne`s generous corporate tax regime? Margaret Hodge, clearly, is sceptical about whether this particular move will raise "any significant extra tax revenue for this government", whilst tax expert Richard Murphy has pointed out that Starbucks` existing head office operation in the Netherlands has been loss-making since 2010, and paid just £281,500 in tax last year.

     When a company with such an appalling record in tax evasion and avoidance relocates its headquarters to this country, should the announcement be greeted with celebration, as demonstrated by the London Chamber of Commerce, or caution? A few more jobs may be created, but the suspicion remains that this country is an "easy touch" in terms of corporation tax payment, and that the present government`s claims to be attacking tax avoidance holds no water, especially when the number of inspectors at HMRC continues to fall.

     It`s undoubtedly good news that the BBC is undertaking a "review of its £200m annual bill for on-screen talent"; if the so-called "stars" don`t accept lower pay and choose to leave, good riddance!  Not only have they been over-generously paid out of taxpayers` money, in years of austerity for the majority of people in this country, many clearly have been using tax avoidance scams. How is this country ever going to rid itself of what Margaret Hodge has described as an  "industry", if the state-owned broadcasting corporation pays many of its employees through "personal service companies", so that they pay tax at a lower rate? It should be a privilege to work for the prestigious BBC, just as it should be to represent the country at sport, or work for the government and people in parliament, but if such people insist on paying the incorrect amount of tax, they should be shamed and sacked. No representation without taxation!

Policies for Labour to reduce inequality

Whilst it is difficult to disagree with Will Hutton`s support for the thesis of the economist, Thomas Piketty, that capitalism is endangered by the "rising levels of wealth inequality", agreement with his conclusion is more problematic. Hutton admits much of the Scottish desire for independence may be caused by dislike of "toxic wealth inequalities", yet thinks solutions like "a top income tax rate of up to 80%" and "effective inheritance tax" are "currently inconceivable".

       Is it not perfectly conceivable that Labour, getting the inevitable "wake-up call" after its hammering in the Euro elections, adopts policies for which the majority of the country clearly craves? A sliding scale of income tax, with 45% for £70-149K earners, 50% for £150-200K, 60% for £200-250K, stopping at 80%, would not seem unreasonable to the majority of people in this country; even under Thatcher, the rich paid 60% income tax. Support for a Tobin-type tax on financial transactions, joining with the majority of the EU on this, would be popular, as would increasing the minimum wage to living wage levels, and promising legislation to introduce Co-determination, on lines similar to its use in Germany, with trade union representatives on company boards. Whilst nationalisation on a large scale will not happen, a proposal for a state-owned bank and energy company could attract customers with more attractive rates, simply by having 3% profit margins rather than the 5+% of the private sector, and thereby force a change of tune from existing providers. The millions paying a high proportion of their income to profiteering landlords would welcome their rents being capped at 2010 levels, and also the introduction of an Ofsted-style inspection authority, to ensure rents are fair and properties well maintained. 

    No plans for redistribution of wealth would be complete without proposals to deal with tax evasion and avoidance, and after this government`s rhetoric-only approach, making a difference should not be hard; how about re-employing the thousands of tax inspectors who have lost their jobs at HMRC and ending "sweetheart deals" for starters? The idea that tax avoiders of any type should be awarded, or keep when found out, their honours or right to represent this country, is preposterous.Charitable status for private schools could also be ended, and money to the Treasury increased by VAT being imposed on school fees.

   If Hutton bases his pessimism on Labour`s feeble responses to inequality and coalition austerity so far, he may have a point, but we have to hope that Miliband was telling the truth when he promised a political party different from the others. What is the point of being a Labour Prime Minister if all you intend to do is tinker rather than transform?

 

 

NHS is the priority

Free healthcare at the point of use is a principle which any political party worth its salt should be determined to maintain, even if there is a projected budget deficit of £30bn by 2020. If more money for the NHS has to be found, so be it, and for any party leader with principle and bottle, it should be imperative to say so. Even the IMF have acknowledged that the rich are too lightly taxed in this country, whilst the EU are introducing a Tobin-type tax on financial transactions, and rich individuals in this country get away with tax avoidance to the tune of at least £35bn a year, not to mention the trillions squirrelled away in tax havens; so really, if our excellent health service is "at risk", the government must take the blame.

   What would the electorate say in answer to this question? "Which of the following is essential: HS2? Trident renewal? A well funded NHS?" -  The King`s Fund director of policy might think there is a problem with more funding because of the "deficit-reduction debate", but he is correct only if politicians  have the wrong priorities.

Osborne and tax avoidance, Gove, History and war.

Osborne and tax avoidance: 

Tax avoiders beware; first there was "morally repugnant", then "smell the coffee", and now "no safe haven". Maybe Osborne`s plans to bring to justice tax evaders who had "previously claimed ignorance of the law to escape prosecution" will have some effect, but many will be justifiably sceptical. Will the thousands who have lost their jobs at HMRC be re-employed? It doesn`t make sense to sack inspectors who might earn say £50K but collect £100K. Then there`s the question of the "patent box", a wheeze devised by so-called tax "experts", approved of by the government, and designed to enable most large businesses to pay hugely reduced corporation tax, in the region in some cases of 5%. Does this give the impression of a government determined to close a "tax gap" which stands at a minimum of £35bn a year? Will effective action ever be taken as long as we have governments in the pockets of bankers and speculators? We would be more willing to believe the Chancellor if, for example, the ending all government contracts for companies known to be either tax avoiding themselves, or advising others on how to do so, was also proposed.

       Actionaid has revealed in its report  about the scale of tax evading by the FTSE 100 listed businesses, that banks are the most prolific users of tax havens. Is it not ludicrous that two of the major banks, partly owned by the British taxpayers, are so totally concerned with profit, they evade paying the correct amount of corporation tax to their employers?

     Ending tax avoidance and evasion will require not only legislation with less loopholes, but a change of culture, so that people are disgraced, knighthoods and honours returned, careers finished, and prison sentences imposed when individuals and companies fail to pay the correct amount of tax. Somehow, I don`t think that is what Osborne has in mind!

 Gove`s history and War:

 So Gove`s examination changes will result in "greater emphasis on British history", rising to 40% of the content.  This in itself should not cause too much concern, as the totally pointless rote-learning in chronological order of kings and queens will take place earlier; however, more worrying is which topics have to give way. Hopefully, the Blitz can still be studied, so that pupils can learn that bombing civilians causes only hatred, and increases determination to defeat the enemy. Perhaps the 19th century`s invasions of Afghanistan by Britain will illuminate the stupidity of further invasions, but the hatred for the foreign invader, which the Vietnam War displays perfectly, could well be forced off the syllabus.

     Whatever happens, let`s hope headlines like "Afghans hated the British more than the Taliban" will not be surprising to our future History students, provided, of course, they have learned their lessons better than our politicians!The fact that the Ministry of Defence has recently tried to block the publication of two books, written by soldiers in the field of action, and depicting the truth about another disastrous war in Afghanistan, clearly reveals a political class in Britain knowing little history, British or otherwise. Privately educated toffs in Westmister may know the difference between a Plantagenet and a Norman at a hundred paces, but why they don`t know invasions are unpopular and mass bombing kills civilians and increases hatred is a mystery.

    Whatever do they teach them in those private schools? 

Taking scandals "incredibly seriously"

Michael Gove may argue that the recent expenses scandal and the blatant failure of MPs` attempted self-regulation with their standards committee have made it essential for "the political class as a whole to reflect", and that these disclosures act as a "warning to take these issues incredibly seriously", but the truth is they will have little effect. Politicians may claim the usual soul-searching and the need for reform and complete overhaul, and such like, but it`s been heard so often, few will listen, let alone believe. Whilst the public`s distaste for bankers also grows unabated with every new scam, this concern is largely ignored; how else, following Miller`s resignation, can the promotions of a former Deutsche Bank director and a former director of the investment bank BZW be explained?  A government so in cahoots with the City, and seemingly in denial of the wishes of most of the people it represents, is bound to suffer huge electoral setbacks, inevitably starting with the European elections next month. An Opposition so cautious, when there is real need and demand for fundamental change and transformation, will suffer similarly. No doubt the success of Ukip,with 34% in the polls last weekend, and likely to be higher now, will be viewed as another "warning" to be taken "incredibly seriously", and the Today programme will echo to the sound of politicians from the main parties emphasising their responses to this "wake-up call"?

    Economic hardship for the majority, increasing inequality with obscene wealth for a small percentage at the top, and a political class obsessed with self-aggrandisement, led by a PM who acts "like the shop-steward of a hated Westminster club", are the harbingers, as history shows us, for change. Miliband can win the election with radical proposals, and gain a mandate for a new society, based on fairness and reducing inequality. A pledge that all Labour candidates will make their tax records public before May 2015 would be one way to convince the electorate of his resolve, and simultaneously throw down the transparency gauntlet to the Tories!

Morning Star letter on NATO

In his excellent article on NATO`s "relentless march into eastern Europe" as a cause of Russia`s recent assertiveness, Jeremy Corbyn failed to mention one important point. (A Monopoly on Expansion. 03/04/14) The west has reneged on the promise made to Gorbachev in the various talks which preceded German unity. With West Germany being a member of NATO, and the east a member of the Warsaw Pact, the need for Russian agreement was imperative, and only when Baker, President Bush`s Secretary of State, said that there"would be no extension of NATO`s jurisdiction for forces of NATO one inch to the east" was Gorbachev persuaded.

  As Corbyn`s article emphasised, the duplicity of politicians in foreign policy is not confined to Russia, as western propaganda would have us believe, and his argument that there is "more than a taint of double standards and hypocrisy in western European and US concerns over the Ukraine" is irrefutable.

 

Labour and young voters

The news that "support among 18-35s is only 19%" in favour of a "like-for-like renewal of the Trident nuclear missile system" will not, sadly, cause much concern in government circles. The spokesperson for WMD Awareness is right when she says that "young potential voters are not being engaged by the government on this issue", but are young people being "engaged" on  any issue? It`s clear the Tories especially are concentrating their election bribes on those who historically are most likely to vote. This would explain not only the benefits to pensioners in the recent budget,and the refusal to increase tax for the well-off, but also Cameron`s recent refusal to contemplate changing voting procedures, stating voting in an election was "too important to be reduced to X Factor style button pushing". He may have a point, but such blinkered policies regarding young adults do provide opportunities for an opposition party with nous.

      Coalition policies have done next to nothing for the majority of young people, with youth unemployment far too high, social mobility shrinking rather than increasing,university fees tripling, and private renting reaching rip-off levels; levels of pay, even at graduate level, without internships and networking, tend to be below £21,000, as we learn from the student loans debacle, and apprenticeships few and far between. Labour would do well to cash in on this, and propose immediately future changes in the location of polling booths, to supermarkets and shopping centres, and also, college and university campuses, to encourage young people to vote. Only when there is a likelihood of millions of young people voting will parties take their concerns, such as those over Trident, seriously. 

Old Post,March 2013: Tax Avoidance

Tax Avoidance: “No Representation without Taxation”

The recent scandals involving major multinationals like Starbucks and Amazon, and celebrities like Carr and Paxman, have brought the attention and concern of the public to the issue of tax avoidance and evasion. According to a recent document published by War on Want, “as much as £20 trillion is now held in secrecy jurisdictions, better known as tax havens. These allow big companies and rich individuals to hide billions away from the prying eyes of the tax collectors. If this money was subject to tax it could generate as much as £180 billion a year in extra revenue”. Now our faith in the current tax system is to be challenged even more, as we learn that the new head of HMRC, replacing the disgraced Hartnett, famous for the so-called “sweetheart” multi-million pound deals with tax avoiding companies like Vodaphone, is likely to be the highly criticised head of UK Border Agency.

       When CEOs of these “giant corporate parasites” employ accounting firms like Deloitte and KPMG to lower their tax payments, are they worried that the end result could well be the closure of rival firms, and thousands losing their jobs? They must know that by paying relatively next to nothing in tax, they are able to undercut the prices offered elsewhere, and ultimately drive others out of business. Amazon, for example, seems to be intent on clearing all highstreets of retail outlets, just as Tesco and the major supermarkets want to see the end of corner-shops, butchers and fruit and veg stores. Such “economic cleansing”, similar to some of London`s councils foisting off their poor inhabitants to more northerly climes, cannot be tolerated.

       What are people who deliberately avoid paying their fair share of tax actually doing? Aren`t they telling the rest of us that the tax laws are for us, and that if we want a better country, with hospitals, roads, schools and all the trimmings of a modern 21<sup>st</sup> century society, we have to pay for it , because they will not? Of course, they want to enjoy the benefits, share the occasional Olympic-type glory, but when it comes to paying their share, they`ve presumably got better things to do with their money.

       When rich individuals set up their own companies, so that income tax can be avoided and the much lower corporate tax be paid, or even better, when they can borrow from the company and pay no tax, as they have not actually earned anything, they lower the amount of money going into the Treasury`s coffers, and make future tax rises more likely, and cuts to hospitals` and schools` budgets more likely. They clearly are not concerned that such avoidance, losing the government billions every year as it does, will inevitably cause job losses, leading to mortgage and rent problems, depression and despair, and driving thousands more children into poverty.

 The government of course, well aware of the electorate`s disgust, has declared war on tax avoiders; businesses that think they can pay no tax in Britain need to "wake up and smell the coffee", David Cameron famously said, whilst Osborne described all avoidance as “morally repugnant”. However, this mere window dressing is a feeble attempt to hide the truth, which is that the Tories have no intention of stopping what Margaret Hodge, in her role as chair of the Public Accounts Committee, has described as an “industry”. Let`s face it, if they invite representatives from KPMG to advise Treasury committees dealing with corporation tax, they are not going to close loopholes; if they introduce their initiatives, like the Patent Box wheeze, which results in some businesses paying as little as 5% corporation tax, they are never going to change the tax culture of the country.

   So what can a government, or in our case, an opposition party, intent on such change, do? How about some transparency for starters? In this age of modern technology it is possible to make available online the tax details of all individuals and corporations, as various Scandinavian countries have done. This would put moral pressure of sorts on to CEOs and individuals to change their ways, as they see their careers and reputations reaching their rightful conclusions. Now that a General Anti-Avoidance Rule appears to be heading for the statute book, one deterrent becomes more obvious: a few prominent businessmen and “celebrities” in court, with all the associated  press coverage, and some hefty fines, and even some prison sentences, could have a chastening effect.

     One other possibility remains: could there be a better time to remind everyone what being a British citizen entails? Why should tax avoiders, who do their utmost to avoid making their proper fiscal contributions, maintain their right to participate in the democratic process? Why should sports people be allowed to represent us if they contribute next to nothing towards the costs of running their country? "No representation without taxation" sounds a good slogan! Should MPs, judges, councillors and such like be allowed to hold public office if they avoid paying their fair share? Should the taxpayers` funded BBC employ "celebrities" who have formed their own companies for one obvious purpose? Should known tax avoiders appear on the Honours list? Should knighthoods and such like be returned by people since discovered to have been fiddling their taxes?

So much could be done, or pledged, by a political party intent on ending the current culture of tax avoidance. They might make a few enemies on the way, but they would be sure to win many more votes! However, don`t hold your breath. In April last year, the Guardian  reported that Cameron promised the tax details of leading Coalition cabinet members would be made public after the May elections. When he failed to do this, Labour`s silence was deafening.

    

GCSE grades: the smokescreen

Strange isn`t it, that whenever British governments, dominated as they always are by the privately educated, decide the time has come to change the GCSE gradings, it always follows a few years of examination success for the state sector?  With teaching unions rightly complaining about the Pisa measurements being flawed, as some countries exclude from the testing "certain types of children to boost their scores", comparison with other countries` results is merely a smokescreen for the true reason for political concern; changes have to be made because there is so little difference these days between examination results of the schools in the state and private sectors.

    Back in 1975, the old top O-level grade of "1" was replaced by an "A", but with so many students reaching the required standard because of teachers` and pupils`hard work, the "A*" came in., and now the "9", for the same reason and purpose, even though results reach schools with not only the the grades achieved, but the marks also! How insulting, then, for a DfE source to have the temerity to say that in the future "the top grade will be awarded only for top performance", as if  it couldn`t have been previously because a small percentage of state school pupils attained it. Somehow, it seems, the examination system must be designed to reflect that private schools are worth the money, and like giving them charitable status, and exempting their fees from VAT, favours from governments are needed to ensure their continuing existence.

    Gove, intent on taking education back to the two-tiered system of the 1950s, invented a non-existent crisis about "stagnating standards", and the results will be soon felt. He will be happy, no doubt, when thousands of pupils are deemed failures, and schools will, under Ofsted pressure, be forced to concentrate on the top 40 %, inevitably leading to 21st century secondary moderns. So much for the government`s concern for social mobility!

 

 

Another bad week for democracy, and good week for Farage

Whilst being totally accurate in saying, "MPs look as if they still don`t get it", the Guardian editorial last week underestimated the damage done by the latest scandal regarding misappropriation of taxpayers` money by elected members. Miller`s totally inappropriate punishment and apology will no doubt have added thousands to the numbers intending to vote Ukip in the forthcoming Euro elections, but the fact that it was left to "MPs on the standards committee to adjudicate" will not have gone unnoticed by the electorate either, especially as they overruled the recommendation of the standards` commissioner that she pay back more than £44,000.

     The debates with Clegg emphasise how Farage`s popularity can partly be explained, not just by his views on Europe, or even on immigration, but by his assertion that Britain is being ruled by a political club in their "Westminster bubble", divorced from life`s realities. The sight of ministers rushing to be seated near Miller on the third row of government benches, to show their solidarity as she made her "Whatever 31 second" apology, proved his point, and moreover, was little less than sickening! 

     Cameron`s failure to dismiss Miller, allied to Miliband`s lack of insistence that MPs should be barred from making judgements on colleagues which overrule the commissioner`s suggestions, will have made Farage`s week even better.Speech writers for the party leaders will already be writing, ahead of the May election results, how Ukip`s success has been a "wake-up call" and "lessons will be learned". Give me strength!

     Whilst Cameron is right to say that voting in a general election is "too important to be reduced to X Factor style button pushing", his insistence on retaining the present system speaks volumes. His policies have done nothing for young people, with youth unemployment far too high, social mobility shrinking rather than increasing, and private renting reaching rip-off levels,  but the most-likely-to-vote brigade gets pension freedom and more tax-free saving opportunities. Labour would do well to cash in on this, and propose immediately future change in location of polling booths to supermarkets and shopping centres, and also, college and university campuses. It would be interesting for the potential voters to see the Tory reaction.

Labour and Rent Control

If, as the ComRes polling for Generation Rent suggests, the result of next year`s general election could well be determined by the "35% of people in the private rented sector who describe themselves as floating voters", Labour had better get its skates on. As the government seems intent on providing more opportunities for the Buy-to-Rent sector,with not only its Help to Buy system apparently being of as much assistance to landlords as first-time buyers, but also its budget proposals encouraging pensioners to enter the frame, and now its Build to Rent scheme adding another 10,000 properties for renting, Labour should be working closely with the Generation Rent campaigners.

    Just as the Tories clearly see the existing and future landlords as their supporters, Labour should be honing in on the tenants. The shadow housing minister said "several initiatives" were being planned, but failed to mention details. If the Help to Buy system is to continue, should it not be exclusively for first-time buyers who will occupy the property? Is there not a need, too, for an Ofsted-type organisation to be set up to inspect all rented property, including those houses rented out to students in university towns? Depending on the property`s location and standard, a grading or banding system could then be introduced along council tax lines, with rents set accordingly. Rents are universally too high, and with housing benefit from the taxpayers subsidising the landlords` profits, regulation is clearly needed; perhaps a cap at 2010 levels might be a start, whilst long term changes are discussed? Lowering demand will also be beneficial, so a huge increase in social housing availability is essential.

More NHS privatisation propaganda!

Why do thinktanks and suchlike, when arguing for much-needed extra funding for the NHS, weaken their claims with wild assertions about its inefficiencies? Whilst not doubting that "a shortfall of £30bn a year is expected by 2020", and that problems exist, millions will disagree with Warner and O`Sullivan when they state that the NHS is "not offering brilliant care", giving "poor value for money", and in "miserable decline". So much for the "more measured view of the NHS" as requested by the leaders of ten NHS organisations back in January!  Not a word on how many of the NHS`s problems caused by the government`s job and financial cuts! It is an oft-used ploy of this government`s propaganda machine, persuading the people with alarmist stories and emotive language about an organisation`s failings, before taking its first steps towards privatisation, for surely, that is what the proposed £10 membership scheme is? Free health care at the point of use is a principle to be maintained at all costs if this country wishes still to be described as "civilised", far more important than high-speed railways, nuclear weapons or being a "full spectrum defence partner" of the USA.

  The report is also typical of its kind in that it gives no reason for the NHS having to "escape the constraints of general taxation", as if income tax rates cannot be changed; it is well-documented that the fortunate people earning between £70,000 and £149,000 pa. have been treated very leniently in terms of taxation by this government, and that, perhaps, is the "uncomfortable truth" which our political leaders need to accept? It`s worth remembering too, that under Thatcher, for many years, the top rate of tax for the very rich was 60%.

Banks owe compensation for mis-buying!

The banks continue to take us for idiots. Another instance of "taxpayers being fleeced by a sophisticated City operation", this time promising, in return for extra shares in Royal Mail, to "stay in for the long term", and then selling them to hedge-funds.

     So, not content with mis-selling insurance, fixing Libor interest rates, manipulating the foreign exchange markets, even laundering Mexican drug money, whilst all the time claiming "ethics come before profits", banks can now add "mis-buying" to the list of skills that these "best people", seemingly valued more highly than any other workers in the country, have at their disposal! A government with any decency would demand the repayment of those banks` profits, and treble them! If compensation is required for mis-selling, the same should be true for mis-buying!