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November 2012

Polly\’s Right: We should be more like Sweden

Despite its image as a welfare state, Sweden’s central government has little responsibility for public services. Instead, local and regional councils provide health, education and social services in their areas and set their own income taxes to pay for it.

Three quarters of the country’s public services are provided locally, with 80 per cent of the cost raised by the 290 municipalities and 20 county councils. Central government grants, largely involving transfers to support less populated areas, account for only 12 per cent of spending, with the rest raised from fees and rents.

Income taxes average 32 per cent across the country but vary according to where Swedes live. Those earning more than £3,600 a month also pay 20 per cent to the central government, making a marginal tax rate of 55 per cent. Councils do not collect corporate taxes, which go directly to central government.

 

It\’s a place where local government actually means something. Might be worth importing that idea, eh?

Polly still doesn\’t get it, does she?

The government inherited a severe housing shortage: Labour failed to build, too. But cutting housing benefit turns a shortage into a crisis. Social housing is shrinking, while the cost of renting or buying is well beyond the reach of growing numbers. As the squeeze worsens, rents are rocketing, up by 4.3% last year, up by a third in three years in London. As people can\’t pay, landlord evictions have risen by 70%. Slum landlords are back: 42% of tenants are in sub-standard properties. Labour promises regulation. Rent controls are needed too.

 

We have too little housing. Thus we should have price controls on the price of housing.

Err, right. Reducing the price of something is a well known way of increasing the supply of it isn\’t it?

A carbon tax on oil exports? What stupidity is this?

The world\’s largest oil-exporting countries have been asked to consider imposing a small carbon tax on oil as a way to break the deadlock over finance for poorer countries in the UN climate talks.

The Ecuador-led initiative, submitted to the Organisation of Petroleum Exporting Countries (Opec), could see a 3-5% tax levied on every barrel of oil exported to rich countries. This could potentially raise $40-60bn a year for the green climate fund, which is expected to be the principle route of funding for developing countries to adapt to climate change.

So what would actually be the incidence of this tax then?

It would be on the oil exporters. The countries themselves.

There is a market clearing price of oil. Whatever that is. OPEC produces a lot of the exports/imports, yes, but there\’s also a lot of domestic production (and non-OPEC production) about the place. Oil is also fungible. Sure, there are a few differences about sweet and sour, heavy and light, there are transport costs. But essentially oil is oil.

So, we tax some part of the global supply but not another part of it. The market clearing price will stay exactly the same. The costs of drilling and lifting and transport and refining stay the same. Where\’s the tax going to come from then? Obviously and clearly, from the state revenues from that oil. From the oil royalties earned by those OPEC countries.

All of which is fine of course. If Ecuador wishes to send money to other poor countries well, good on them. Similarly Saudi and so on. But note that this isn\’t what they think they\’re doing: they intend to impose this only on exports to rich countries. Thinking, presumably, that this will mean the incidence of the tax is on the rich countries.

But, as above, it ain\’t. It comes out of the resource rents currently being collected by the petro-states. Nothing wrong with that at all of course. But it is going to come as something of a surprise to those politicians and their Chancellors when they realise this.

Some tax dodging by Arcadia, eh?

Sir Philip said that Arcadia has paid £2.3bn in tax over the past ten years, including £1.3bn in business rates, £591m in corporation tax, and £278m in national insurance contributions.

Just the time to point out that UK Uncut are indeed ignorant know nothings.

The business, as a business, pays all the tax due. A substantial sum as you can see above.

Tina, Lady Green, does not pay UK income tax. For she is neither resident nor domiciled in the UK. And we just don\’t charge income tax to people who don\’t live here and aren\’t from here. We just don\’t.

There ain\’t no tax dodging going on here folks.

In which you specify my next technology purchase

Rightie ho.

So, who has a Kindle? Or a tablet? Wifie wants one and I\’m thinking about maybe getting something similar.

So, here\’s the background.

1) For wife. It\’s books she\’s most interested in. But maybe movies and games as well. This argues for something more than just a basic Kindle.

2) For me. Books only. So perhaps just a Kindle or a paperwhite or something.

Here\’s the other stuff. We\’ll not be able to use the \”free\” 3G connections: don\’t exist here in Portugal. We already have easy access to the web (each a computer). We\’ve also each got wi-fi available. So that\’s easy, we don\’t need any 3 G of browsing capability. Not really.

Looking around at everything else: iPads are waaaay too expensive. When books are the main object anyway, it\’s just too much.

But it it\’s just books, is there a better option than the Kindle? The Nexus? Some other kit maker? Or is Amazon offering pretty much the best deal.

And here\’s the real point. We\’re both avid readers but we live in a non-English speaking country. And I\’m going to be travelling a lot next years to two other such non-English speaking countries.

It just seems simpler to buy a slate/tablet and gain access to e-books than it does to buy and ship physical ones from the same source.

So, what should the actual hardware choice be? Books, as above, being the main desire.

Haven\’t we all got richer?

Interesting little number:

a typical home in 1952, but at that time around two thirds of properties had no hot water.

It\’s around and about true, inflation adjusted, measured by GDP per capita, that the UK in 1952 was as rich as China is today.

Those who say that it\’s not got better over the decades are simply ignorant.

So which way will Ritchie jump over Rangers?

Supporters and former directors of the old Rangers Football Club were handed a pyrrhic victory over Revenue & Customs last night in the tax case that helped to close the business down.

To the grim satisfaction of the fans, a tax tribunal delivered a majority verdict on the club’s use of Employee Benefit Trusts (EBTs) over a decade, and found in Rangers favour.

HMRC had challenged what it claimed was an “orchestrated scheme”, arguing that £49 million in payments to players and staff amounted to wages, and was liable to tax. The tribunal ruled most of the payments were loans from the club, an outcome that will “substantially” reduce its bill for tax and national insurance contributions.

A world famous football club, driven into bankruptcy, by HMRC demanding, with menaces, more tax than was legally owed.

But of course we are meant never to challenge the taxman. Just to open our wallets and say \”help yourself\”.

So just what is Mr. Murphy\’s view on a negative tax gap like the above?

@RichardJMurphy entirely ditches country by country reporting

Now this is amusing:

Fortunately, a far better system is available: unitary tax. Instead of taxing multinationals according to the legal forms that their tax advisers conjure up, they are taxed according to the genuine economic substance of what they do and where they do it. Each company submits to the tax authorities of each country where it does business a “combined report” providing consolidated accounts for the whole global group, ignoring all internal transfers. The report specifies the group’s physical assets, workforce and sales and the overall profits are then divided up among jurisdictions according to a formula weighing these three factors. This system would benefit everyone, particularly developing countries.

So that\’s his muckers, Nick Shaxson and John Christiensen.

And Ritchie adds:

This is the only way forward.

At which point we should note this:

Each company submits to the tax authorities of each country where it does business a “combined report” providing consolidated accounts for the whole global group, ignoring all internal transfers…….overall profits

This entirely obviates the need for country by country reporting. The very thing that Ritchie has been campaigning for for near a decade.

Ooooops!

For the point of country by country is to insist that the corporation shows where it makes its profits so that profits can be taxed in that jurisdiction where they are made. But unitary taxation entirely ignores this distinction. We don\’t care – indeed we don\’t even look at – where the profits are made. We just look at the total and divide it by the formula.

Poor old Ritchie. He\’s simply too dim to realise that he\’s supporting something that entirely wipes out his last decade of work.

Is there a gay gene

Sadly they\’re talking past the real point.

And despite the obsession of some scientists to find a \”cause\” for our \”condition\”, there remains no real evidence that sexual preference is pre-determined by genetics.

Correct.

Many gay people want to believe we were \”born that way\” to provoke sympathy and understanding.

Ah, but.

I believe that I was born gay.

Entirely plausible, probable even.

The problem here is the usual lefty ignorance of science.

Given that homosexuality is unlikely to be something selected for in evolution (you can, and people do, make rather tortured arguments insisting that there are benefits to the survival of siblings) a genetic basis seems really rather unlikely.

Not impossible, agreed, but prima facie at least unlikely.

However, that doesn\’t mean that sexuality is not, or cannot be, determined by the time of birth. For there\’s that whole 9 months of gestation in which things can happen. Genes aren\’t the only thing you know!

Quite how much weight to put on this idea I\’m not sure. But it\’s one that makes sense to me at least. That homosexuality is akin to autism…..there, now that will get me into trouble. No, I don\’t mean something generally thought of as undesirable. Rather, that it\’s something that happens as a result of the waves of hormones that sweep through the foetus at certain developmental stages.

It\’s not (necessarily) genetically determined but environmentally. But it\’s the environment of foetal development and is thus set by the time of birth.

Of course: whether it\’s all about genes, development or simple and pure personal choice makes no damn difference to civil liberties. Consenting adults are consenting adults and there\’s an end to it.

The Very Reverend Spacely-Trellis writes in The Guardian

We are all to blame for the agony of Congo

Indeed, we are all guilty.

Hmm. Or am I thinking of Dr. Kiosk?

A report leaked earlier this year said Rwanda and Uganda were aiding and abetting the M23, motivated as in the past by a desire to control and exploit eastern Congo\’s vast mineral wealth.

How very strange. I thought that was all solved. You know, that bit in Dodd Frank which insists on hte labelling of conflict minerals.

All done and dusted now we\’ve passed a law isn\’t it?

Oh yes indeed, this is wholly moral behaviour

A fiery Jeanette Winterson has called for the hundreds of millions of pounds of profit which Amazon, Starbucks and Google were last week accused of diverting from the UK to be used to save Britain\’s beleaguered public libraries.

In an impassioned speech at the British Library this evening, the award-winning author of Oranges Are Not the Only Fruit said: \”Libraries cost about a billion a year to run right now. Make it two billion and charge Google, Amazon and Starbucks all that back tax on their profits here. Or if they want to go on paying fancy lawyers to legally avoid their moral duties, then perhaps those companies could do an Andrew Carnegie and build us new kinds of libraries for a new kind of future in a fairer and better world?\”

Author calls for other people to be taxed for money to be spent on the produce of authors.

In The City this is known as \”talking your own book\”. We might also describe it as \”spend other peoples\’ money on me\”.

Highly moral behaviour.

On Sky and VAT

A magazine for satellite TV customers published by BSkyB was used as a tax avoidance scheme that saved the company up to £40m a year.

The broadcaster had been saving millions in VAT by charging satellite customers a nominal £2.20 a month for the Sky magazine, using a tax loophole that has now been closed. Magazines, along with books and newspapers, are normally zero-rated for VAT, and this meant Sky could avoid VAT on a small but significant percentage of revenue. The saving, at about £3 to £4 per person, would have amounted across Sky\’s 10 million subscribers to at least £30m to £40m a year.

Err.

Wasn\’t it Sky\’s customers who didn\’t have to pay £30 to £40 million a year in VAT?

Do we, for example, say that Teh Grauniad is benefitting from not charging VAT to customers? Or that cursomers are benefitting from not paying VAT on Teh Grauniad?

Here\’s a little tax question

When can a business write off a bad debt for tax purposes?

The reason I ask is:

An analysis by Experian of millions of supposedly solvent firms that decided to close down voluntarily revealed that they are in fact leaving behind combined \’hidden’ average debts of £4.7bn each year.

This compares to the £11.7bn left by businesses that went through insolvency proceedings last year.

Obviously, in the management or firm accounts that debt is written down when there\’s even a suspicion it won\’t be paid. But what about the tax accounts?

Specifically, do you need the letter from the insolvency process to make that debt allowable as a loss?

If so, wouldn\’t this mean that too much tax is being paid?

I really don\’t know the answer which is why I ask.

Mrs. Hodges was always going to have some questions to answer…..

But according to Ms Patel, Stemcor has also been engaging in a series of controversial tax avoidance measures in the UK, including \”transfer pricing\”.

\”Given the very serious accusation you made of Starbucks,\” writes Ms Patel \”that they were \’exporting profits to minimise tax\’,\” it raises serious concerns that \”a seemingly similar approach [has been] taken by Stemcor.\”

Stemcor, where Mrs Hodge declares a \”registrable shareholding\” was founded by Mrs Hodge\’s father Hans Oppenheimer. It employs 2,000 people in 45 countries with a turnover of more than £6.3bn. In the UK, where Stemcor is based, the company generated £2.1bn of sales with £65.2m of profit in the year ending December 2011.

It paid just £157,000 in tax to the Exchequer last year, equating to just 0.01pc of the revenues it booked. Stemcor\’s UK tax contribution makes up only 2.7pc of the tax it pays globally, despite generating about one-third of its revenues in Britain.

In the letter to Mrs Hodge, Ms Patel writes: \”As Chair of the PAC, you have to be able to hold people to account for their decisions and judgement. My primary concern is that without answers to these questions, you would not be able to carry out your role. There is legitimate concern that your leadership might detract from the objectivity of the inquiry [into Starbucks, Amazon and Google] and could undermine both the authority and integrity of the Committee.\”

Tee hee.

And she doesn\’t do herself any favours with the response either:

On Monday, Mrs Hodge said: \”I have never played any role in the running of the company, or in any financial decisions. As a responsible shareholder, I have regularly sought, and received, assurances that Stemcor pays its fair share of taxes in the UK.\”

I just cash the dividend cheques…..

And this of course is clear evidence of tax avoidance:

She added her direct holding was 1.26pc while shares are held in trust for her family, children and grandchildren.

That\’s making sure that the wealth cascades down through the generations without the tiresome necessity of having top pay inheritance tax.

And doesn\’t Ritchie fulminate against those who do such things?

But there we are. Direct evidence of tax avoidance by a Labour MP. Let\’s see who picks up on it shall we? Who makes the usual furore. UK Uncut perhaps?

Better dig it all up then

A corner of Tuscany famous for its cowboys and long-horned cattle is fighting a mining company\’s plans to dig for a rare but toxic type of metal.

Mmmm…antimony.

\”This metal has been compared to arsenic in terms of its toxicity,\” Maurizio Rossi, a lawyer who lives in Manciano, a picturesque hill top town which lies close to the proposed mine, told La Repubblica newspaper.

Amelia Gatacre, 50, a British designer who owns a house in the area, told The Daily Telegraph: \”The mine will destroy an extraordinary, untouched part of Tuscany in which there is a lot of organic farming. It could pollute water supplies forever.\”

Contaminate water supplies? Oh my.

Better dig it all up then, out of the way of all that rain seeping down through the earth, and stick it into flame retardants where it won\’t eh?

Not the greatest of surprises

The \”State of the Tropics\” study, run by 13 institutions across 12 countries, reported that people living in the world\’s tropical zones in 2010 had an average life expectancy of 64.4 years.

This was 7.7 years less than those living in non-tropical areas, according to the broad-ranging research project, which was initiated by Australia\’s James Cook University (JCU).

You\’d get the same result if you simply mapped GDP per capita around the world.

For average lifespans are influenced by wealth and the countries in the tropics tend to be the poor ones.

Spain\’s bright idea: Free visa with your house

Sounds reasonable enough actually:

Spain is to offer automatic residency to wealthy foreign property buyers in an attempt to lure Chinese and Russians to reduce its huge stockpile of 750,000 unsold properties.

Buyers who acquire a home worth €160,000 or more will get a residency permit in a move designed to attract more purchasers from the two markets. British buyers have all but deserted Spain in the wake of the 2008 crash, but the Russians and Chinese are still buying up properties for cash.

Well, yes. My only question is, is there still a property that sells for as much as €160k in the country?